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The gameplan


Capital

expenditure for 2006-07 (April-March) is budgeted at Rs 14,000 crore.

ONGC is

engaged in negotiations to acquire oil and gas assets worth $15 billion.

Plans to

set up a 7.5-million-tonne refinery in Rajasthan.

New Delhi, March 10

ONGC expects to start the commercial gas production from the two nomination blocks in the Krishna-Godavari Basin by June.

Mr Subir Raha, Chairman, ONGC, said, "We plan to begin commercial production of about 1 million cubic meter per day of gas from the two blocks G-1 and GS-15 in the KG Basin by June this year, and increase it to 2 million cubic meters by June next year."

Speaking to presspersons at the sidelines of the promotional road show for the sixth round of New Exploration Licensing Policy (NELP), Mr Raha said this would be the first time deep water gas would be commercially produced in the country. He said the company's capital expenditure for 2006-07 (April-March) is budgeted at Rs 14,000 crore, 95 per cent of which would be in domestic oil and gas exploration and production. "The higher capital expenditure is for the development of new fields, acquisition of new assets and enhancement of our exploration works," Mr Raha said.

The company would produce 26.88 million tonnes of crude oil in 2005-06, down from 28.13 million tonnes last year, and is projecting an output of 29.09 million tonnes next fiscal. The company's share of oil from properties abroad is expected to rise from 3.70 million tonnes this fiscal to 4.73 in 2006-07. Natural gas output from overseas properties will rise from 1.47 billion cubic meters to 1.71 billion cubic meters.

Overseas acquisitions

He said ONGC is currently engaged in negotiations to acquire oil and gas assets worth $15 billion. Regarding reports that OVL was teaming up with Russian oil company Itera for acquiring OAO Udmurtneft, a subsidiary of TNK-British Petroleum, which has licences to develop 26 fields in Russia, Mr Raha replied in affirmative. He, however, did not give any further details. The OVL-Itera consortia has been shortlisted with at least four others after the initial round of bidding and final price bids are to be submitted by April end, as per reports.

Ending discounts to refiners

On the domestic front ONGC has sought permission from the Government to end the discount it offers on crude oil from its offshore assets to domestic state-run refiners. "We have requested the Government to discontinue the ongoing system of the oil Ministry allocating ONGC's offshore oil to other state-owned refiners," Mr Raha said.

The refiners Indian Oil, Hindustan Petroleum, Bharat Petroleum, Kochi Refineries and Chennai Petroleum Corp get offshore crude from ONGC at Government-determined discounted rates. Mr Raha said ONGC sells 13 million tonnes of its offshore crude to state refiners.

"We expect the Government to accede to our request and are expecting that by April we will be free to negotiate prices with the refiners and be able to sell crude to them at the market rate," said Mr Raha.

Rajasthan refinery

On the company's plans to set up a 7.5-million-tonne refinery in Rajasthan, Mr Raha said, "A new company will be incorporated for setting up the refinery. It will be a public-private partnership with the State Government, ONGC and MRPL together owning 49 per cent stake while financial institutions will hold the remaining 51 per cent."

Asked if Cairn Energy would be a part of the new company, he said, "If Cairn wants, it can buy stake from the 51 per cent share of financial institutions." ONGC has a 30 per cent stake in an oil and gas block in Rajasthan, where the UK-based Cairn Energy holds the remaining stake and operatorship.

(This article was published in the Business Line print edition dated March 11, 2006)
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