The Hindu Business Line : ONGC told to get third-party audit for every well drilled

ONGC, which has been receiving flak for deviating from its core business of exploration and production (E&P), has been told by the Petroleum Ministry to consider third-party audit for every well that it drills.

At a recent meeting on the company's Business Plan Review, the Ministry is understood to have directed the company to adopt the system of third-party audit in order to avoid instances of high input costs on wells, particularly those that have been termed as dry wells.

Industry sources said that with rising costs, hitting dry wells could prove to be highly expensive for exploration companies.

This is one issue that every E&P company has to look into, they said, adding that an investment of Rs 25-30 crore goes into drilling an onshore well, while drilling an offshore well costs Rs 150-200 crore.

The Petroleum Secretary, Mr M.S. Srinivasan, is understood to have said at the meeting that ONGC has to "get its act together" to retain its position as the country's premier oil and gas company and that it would have to perform better in the competitive environment.

Questions have been raised time and again on the dip in company's oil and gas reserves.

According to sources, ONGC's success rate in exploratory drilling stands at 1:5, including deepwater drilling where the probability of success is low.

However, this success rate is better than what has been achieved in many developed countries, including the US, they added.

The company drills around 150 exploratory wells every year, out of which approximately 30 produce oil and gas.

Currently, ONGC has adopted the international parameter prescribed by the American Petroleum Institute for auditing.

Some other initiatives, like adoption of the Integrated Well Completion (IWC) mode in drilling, have now been accepted as a standard by some of the other operators as well.

Speaking to Business Line, Mr R.S. Sharma, Chairman and Managing Director of ONGC, said that the company was focused on the E&P front and has set itself ambitious strategic targets, including doubling of its hydrocarbon reserves by 2020.

Currently, 99.7 per cent of ONGC's capital expenditure is on E&P alone.

Despite a production loss of 1.90 million metric tonnes due to the Bombay High North accident last year, the company was able to reach all targets set out for the 10th Plan period, he added.

The company is also striving to improve its recovery by 40 per cent (from the earlier figure of 28 per cent).

ONGC is aiming at 20 million tonnes per year equity oil from abroad.

More Stories on : Petroleum | Oil & Natural Gas Corporation Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page