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Press Release [FREE Access]
Petro Intelligence » ONGC: Another Whisper Campaign To Scuttle Venture?

D.K. Sarraf

Oil and Natural Gas Corporation (ONGC) – the state-owned oil firm – is a behemoth even by international standards. But its record has been patchy even though it had built up an enviable reputation in the field of oil and gas exploration and production. Blame this on the political leadership which, for a variety of reasons, didn’t allow it the full freedom to operate professionally. Its chequered record was also the result of some quixotic choices as chief executive of the oil giant – not all of whom were committed to its progress. The charitable view is that ONGC’s progress was wrecked by some diabolic machinations both within and outside.

What prompted us to pick up ONGC as the subject for this column is the whisper campaign that has been launched against the present ONGC management headed by D.K. Sarraf after he announced plans to bring its deep water block, KG-DWN-98/2 (KG D5), into production by 2019. The gas field was discovered about a decade ago and the upstream major has waited too long to develop it. The Cassandras are now saying that ONGC doesn’t have the deep water expertise to bring the field into production and will need an overseas partner.

R.S. SharmaAs we started to examine the merits of this criticism, we stumbled across certain elements that indicated that there was a deliberate strategy to delay production from KG D5. When polyester manufacturer Reliance Industries Ltd (RIL), with no experience whatsoever in E&P, ventured to produce gas from its block, KG D6, without a partner with experience in deep water production, no one had questioned its wisdom. Its10 per cent foreign partner, Niko Resources, was picked up mainly to get round a government stipulation that it should have a foreign partner. The original government intention, however, was to make the partner as the operator of the field. How that stipulation was waived in the case of RIL is an enduring mystery. Niko has not brought in any technology nor has it made any contribution other than the mandatory investment proportionate to its stake in KG D6 – which is just peanuts for RIL.

Sudhir VasudevaRIL managed to produce gas from DI, D3 fields and oil from MA field in KG D6 with the help of consultants. True, production at KG D6 collapsed soon after it touched 60 MMCMD. The peak production target had been set at 80 MMSCMD. The production collapse did not occur because of faulty production technology or strategy; it occurred because of the faulty assessment of gas reserves. It later turned out that the DI, D3 fields of KG-D6 had only 3 TCF reserves against RIL’s claimed and DGH’s endorsed 10-11 TCF.

ONGC’s KG D5, RIL’s KG D6 and GSPC’s Deendayal are adjacent deep water blocks. Compared to KG D6, the Deendayal block is acknowledged to be slightly more complicated geologically. Still, GSPC a relatively new player, which is not older than RIL in the area of E&P, has almost completed its Field Development Plan (FDP) for its deep water block and production is likely to commence any time now.

V.K. SibalONGC has been in existence for close to 60 years. It has specialised institutes in almost all areas of E&P such as drilling, geology, exploration and production. If someone tries to build a case that it requires a foreign partner for deep water production from its KG D5 field, there has to be something fundamentally wrong with the state-owned company.

Our investigation indicates that the idea of foisting a foreign partner on ONGC was hatched by outside forces and the oil giant’s internal leadership buckled under pressure and bought the argument. ONGC went after companies such as Statoil of Norway and Petrobras of Brazil – and received proposals from them for collaboration.

That is when all the shenanigans began. The Ministry of Petroleum and Natural Gas deliberately sat over their proposals and these companies then withdrew in frustration. BG came up with a proposal to collaborate with ONGC for a deep water block in the KG basin. This was not approved by V.KMurli Deora. Sibal, the then boss of DGH despite the fact that it had the backing of the then petroleum secretary M.S. Srinivasan. The then petroleum minister, Murli Deora, preferred to go by V.K. Sibal’s advice in rejecting BG’s offer. Let us not forget, D.J. Pandian, the then boss of GSPC, once described regulator V.K. Sibal as a ‘strangulator’.

The pattern must now be clear to our readers. Look at the personalities involved: Murli Deora, V.K. Sibal and an ONGC CMD whom we do not want to identify for lack of documentary evidence. First, the ONGC leadership believed, or was persuaded to believe, that it could not produce gas from its KG deep water block on its own. It was then made to scout for partners. And when the partners turned up, they were made to wait for an inordinately long time. MoPNG under Murli Deora played the role of a scuttler and not a facilitator. What is astonishing is that successive chief executives at ONGC were too weak to resist the pressure from the ministry or too vain even acknowledge that there was a deliberate conspiracy to scuttle the venture.

We do notVeerappa Moily want to comment on the case that ONGC has filed in the Delhi High Court alleging theft of gas from its KG D5 block. We do not have the evidence. Nor are we competent to evaluate the claims and counter claims. However, the decision by the ONGC leadership to go to court was extremely bold. Fortunately for Sarraf and his team, Veerappa Moily was out and the present government headed by Narendra Modi is known to respect those who protect the interests of the PSUs. The international consultant, D&M, which is looking into the charge of theft, is also known for its professionalism.

ONGC chairman has announced the target date for putting the field into production. Sarraf is confident of going ahead without a foreign partner. The Modi government is expected to back him as it cannot afford to destabilise someone who is trying to protect the interests of the country’s blue-chip PSU.



To download the latest issue 'Volume 30 Issue 24 - March 25, 2024', click here
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