Policy
India Keen On Establishing A Gas Trading Hub
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Draft Policy For EOR Projects Noble But Challenges Likely
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ONGC In Desperate Hurry To Acquire Producing Assets
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Battle For Reduction In Cess On Crude Oil Begins
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OVL To Be Strengthened For Enhanced Role In Asset Acquisitions
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Regulation
India To Launch Bidding Round Under OAL On January 16
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Projected Domestic Gas Availability May Derail LNG Terminals
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FSRUs Face Uncertainty, Move At Slow Pace In India
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Pet Coke Unlikely To Disappear From India In Near Future
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Alternative Energy / Fuel
NITI Aayog Proposes 15,000 Ton Coal–To-Methanol Unit
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New Projects
L&T Wins A Major ONGC Contract
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McDermott International Awarded Contract In KG Basin By RIL
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RIL Completes $16-Billion Expansion, Doubles Ethylene Capacity
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Six Cos Evince Interest For Storing Crude In Pudur Oil Reserve
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Market Watch
India Challenges China As World’s Biggest LPG Importer
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IGL Smart Card Program
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ONGC Petro Seeks Dealers
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Apar Industries Enters A JV To Market Auto Lubricants
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Companies
Indraprastha Gas Limited
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L&T Hydrocarbon Gets Rs 21 Billion Projects From RIL, HPCL
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OIL Makes 2 Hydrocarbon Discoveries
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GAIL Commissions India’s Second Largest Rooftop Solar Plant
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Essar Oilfields Bags Contracts From Mercator Petroleum
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Cairn India Acquires Controlling Stake In Avanstrate For US$158 Million
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Press Release [FREE Access]
Petro Intelligence » Bombay High’s Tale Of Woe: Short Shrift For Local Talent

by R. Sasankan

Captain Satish SharmaThe Ministry of Petroleum and Natural Gas (MoPNG) and the managements of the companies under its administrative control are straining their sinews to increase domestic crude and gas production to meet Prime Minister Narendra Modi’s target for at least a 10 per cent reduction in oil imports by 2022. In normal circumstances, such a reduction in imports should be difficult in a country where the demand for petroleum energy is surging. However, such a target is possible if there are fresh commercial discoveries of oil and gas. Unfortunately, there has not been a major commercial discovery after Bombay High in the 1960s and South Bassein in the 1970s.

The MoPNG under Dharmendra Pradhan has proposed to offer private players, Indian or foreign, up to a 60 per cent participatory interest in some of the producing fields in the nomination blocks. It is a subject of speculation whether fields on offer have sufficient balance recoverable reserves to meet the Prime Minister’s target. The only field which can make a difference in domestic crude production is Bombay High which has been in production for more than 40 years. On present reckoning, Bombay High is not on offer. Even if offered, it is unlikely that there will be anyone who can make a significant difference.

Col. S.P. WahiDuring my long reporting experience of India’s petroleum sector, I discovered that India’s political leadership has not been enthusiastic about increasing domestic crude production unless it is accompanied by huge outlays. About 16 years ago, when Capt. Satish Sharma was the country’s petroleum minister, I introduced an ONGC executive to him who came up with a proposal to double Bombay High’s production at a negligible additional cost.

The gentleman was none other than K. Damodaran, a legendary production expert. The Bombay High reservoir had already been damaged because of wrong production practices that had been adopted during the Accelerated Production Plan (APP) in the 1980s when Col S.P. Wahi was the chairman and Lovraj Kumar, the petroleum secretary. The country was facing an acute balance of payment crisis forcing the government headed by Mrs Indira Gandhi to negotiate a loan from the International Monetary Fund (IMF). Import of crude and petroleum products constituted the single largest outgo of foreign exchange.

LovrajkumarBombay High, a shallow water field, has a very sensitive reservoir. The rate of production should be in tune with its behaviour. As it was not politically feasible to lower production during those crucial years, ONGC tried to maximise production which damaged the reservoir, leading to a high gas-oil ratio.

The life of an oil field is normally 15 years. By the time Damodaran made his offer, the field had already been in operation for over 26 years. Still, the field was left with more than 50 per cent of the originally estimated reserves. Damodaran’s offer was incredible but no one doubted his ability to crank up production to the desired levels. When production in the country’s first commercial field at Ankaleshwar dropped in the 1970s, the then petroleum minister K.D. Malaviya announced in parliament that a natural decline had set in at Ankaleshwar field. ONGC’s then chairman deputed Damodaran to Ankaleshwar who restored production to the peak level for another seven years. At that time, the ONGC management had honoured him by naming a Gas Lift after him.

K. DamodaranNeither Capt. Satish Sharma nor the then ONGC chairman was interested in Damodaran’s proposal. A deeply frustrated Damodaran sought premature retirement from ONGC. I once casually mentioned this to Dr Vijay Kelkar who felt that ONGC needed western technology for its development. Damodaran’s technology was based on common sense. Geologist Kottilil Narayanan tried to find out the secret of Damodaran’s plan but failed, which strained their relations for ever. (I had recorded this in one of my columns).

The increasing gas-oil ratio continues to play havoc with Bombay High. The field, which achieved a peak production of 20 million tonnes per annum, has been declining steadily. Since Damodaran’s offer, ONGC has hired the services of international consultants twice at a total cost of Rs 300 billion. They drilled innumerable in-fill wells which failed to increase production but slowed down the decline.

In E&P industry, production is a highly specialised area. But ONGC did not choose a production expert to head the production division for the first 40 years of its existence. When Accelerated Production Plan for Bombay High was executed, the Member in charge of production was A.K. Malhotra, a structural engineer with no experience in production. S.K. Manglik was the first production specialist to head the division in the 1990s and by that time Bombay High reservoir had already been damaged.

It was not clear to me why the political leadership rejected Damodaran’s brilliant proposal. The politicians were not the only ones who were cool to his plan; several senior executives at ONGC and top bureaucrats also displayed very little enthusiasm.

I had known Damodaran during the time that I was reporting on the petroleum sector and I had found him to be a genius. My conviction was shared by many within ONGC. Still, the proposal did not go through. Why? When I dug around a little, I discovered a nugget of truth: small is not beautiful in India’s petroleum sector. Damodaran’s mistake was that he had offered to achieve his goal at a negligible cost. The big attraction for the political boss, bureaucrats and top executives at ONGC lies in the size of the cost and the funding mechanism. There is another failing: a contract is awarded straight away if it comes from a well-known Indian or foreign company.

There are a host of talented individuals in the country and within oil companies. They rarely get any encouragement. ONGC has quite a few institutes that specialise in all areas of exploration and production (E&P). But the top management and the political leadership invariably prefer to bring in foreign companies and consultants instead of promoting these institutions by giving them major assignments. These institutes of ONGC have been in operation for more than half a century. They exist but do not make any great contribution. Sadly, they are not expected do so either.

 



To download the latest issue 'Volume 24 Issue 19 - January 10, 2018', click here
Petro Intelligence [FREE Access]
Putin’s Great Game: A Gas Pipeline To India
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ONGC: More Sinned Against….
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PLL: Making Up For Old Lapses
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Bombay High’s Tale Of Woe: Short Shrift For Local Talent
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Foreign Investment
Debt-Ridden Aban Offshore Seeks Settlement With Lenders
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Overseas Investment
India To Help Mongolia Set Up Refinery
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Gas Scene
Sector-wise Consumption of Natural Gas in November 2017
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List Of Importers & Source-Wise LNG Imports In November 2017
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Gas pipelines under execution / construction as on 1st November, 2017
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Domestic Natural Gas Scene : November 2017
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Capacity Utilisation of Gas Pipeline Network as on 1st October, 2017
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Status of Coal Bed Methane Gas development in India (Sept 2017)
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Status of Shale Gas and oil development in India
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Sectoral Consumption of gas in October 2017, far below demand projections
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LNG Imports and Domestic Gross Natural Gas Production In October 2017
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Update: CNG Stations & Vehicles and CNG Sales
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Update: CGD Factsheet as of September 2017
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Natural Gas Share in Prime Energy Mix
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Domestic Gas Price (November 2014 -March 2015 to October 2017 - March 2018)
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Source-Wise LNG Imports In September 2017
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Sector-wise gas consumption of domestic gas and RLNG (July 2017)
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ONGC Asset-wise gas flaring in FY 2016-17
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
End-Use Sectors of High Speed Diesel
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IOC’s Unparalleled Cross -Country Pipeline Network, Market Share, Throughput and Capacity Utilisation
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Petroleum products demand & Gross Domestic Product (GDP) during five year period
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Retail Selling Prices of Petrol and Diesel: India vis-a-vis Developed Countries
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Status of blocks under NELP (2017-18)
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Petroleum Sector’s Contributions To States Through Taxes
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Revenue from the Petroleum Sector and Payout from Government for petroleum subsidy
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Important terms in pricing of petroleum products
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India’s Region-Wise Crude Imports in November 2017
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Retail Selling Price (RSP) of major products in India & neighbouring countries
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Power deficit: Region-wise position for November, 2017
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High Sulphur Crude Processing Hits An All Time High
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Oil India Ltd Cost Structure
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Specific energy consumption (MBN number) of PSU refineries
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Uptrend Stalled In Distillate Yield Of PSU Refineries
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Oil India Ltd : Large and Diversified Domestic Reserve Base
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ONGC: VAP Production
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ONGC Intensifies Exploration In Kutch-Saurashtra
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High Sulphur (HS) & Low Sulphur (LS) crude oil processing
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Latest Estimated Hydrocarbon Reserves In India
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An Updated LPG Profile In Brief ( April- September 2017)
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Import of Crude oil and Petroleum Products (April – October 2017)
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Tenders [FREE Access]
IndianOil
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IndianOil
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IndianOil
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Oil and Natural Gas Corporation Limited
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