Maharatna ONGC has lined up capital expenditure of Rs 36,059 crore in FY15. It plans similar expenditure in the next two to three years. Its foreign arm ONGC Videsh has acquired fields the world over with investments of $5.71 billion, and plans to do a lot more, ONGC CMD DK Sarraf tells Samiran Saha. Excerpts from the interview:
Why has ONGC’s crude oil and gas production been flat in FY14?
This year, the global average decline rate of post-peak fields has been as high as 5-6 per cent. Against this, the decline rate of ONGC’s major post-peak producing fields is around 2 per cent. We are operating 14 such fields of 25-50 years vintage which still contribute over 70 per cent of our oil and gas. We could arrest decline in these fields due to timely intervention through our structured Improved Oil Recovery (IOR) and Enhanced Oil Recovery (EOR) schemes that are being pursued since 2001. Capex of over Rs 18,250 crore is invested in six ongoing development projects. The output may appear flat, but we have actually added new volumes.
You are investing in discovering and arresting decline in ageing oil fields. When will you see returns?
We have been pursuing expeditious development of new discoveries and monetising small and marginal fields. These are high-tech and highly-capital intensive projects. I am personally monitoring two high-value projects, Daman Development and KG DW-98/2. Daman, with an investment of about Rs 5,220 crore, is expected to start production in 2016. The KG-98/2 project is expected to produce its first gas by 2018 and oil by 2019. The peak gas production from the two could amount to 40 per cent of ONGC’s current production or over 25 per cent of the country’s current domestic production.
How does ONGC plan to consolidate India’s energy security?
Last year, our exploratory efforts resulted in 14 discoveries and, during the year, of about 85 MMT of oil and oil-equivalent gas reserves, the highest in last 23 years. Also, for the last nine years, the volume of hydrocarbon reserves established each year has exceeded the annual domestic production.
How would you rate the performance of your overseas arm, ONGC Videsh, so far?
ONGC Videsh is the growth vehicle of the ONGC group of companies. It has demonstrated resilience in terms of production and aggressiveness in acquiring assets. Despite problems in Syria and South Sudan, it has produced 8.36 MMTOE in FY14. This is a 15 per cent increase over last year’s volumes. Furthermore, ONGC Videsh has acquired several blocks in Mozambique, Brazil, Bangladesh and Myanmar, with a total investment of $5.71 billion. This will add significant volumes in the coming years.