ONGC wants international crude oil prices for produce from its marginal fields. For the producing fields the company wants the price to be close to $65 a barrel after extending discounts to public sector oil retailers.
Marginal fields are those that ONGC was given before the licensing rounds.
A significant quantity of hydrocarbons is locked up in these fields, but the fields cannot produce economically on a standalone basis, or with a conventional approach.
DK Sarraf, Chairman and Managing Director, ONGC, said: “Marginal fields can be developed and matured fields can be redeveloped (improved oil recovery schemes can be implemented) if the Government does not levy an under-recovery discount on crude from such fields.”
The company has requested the Government to exempt it from shouldering the subsidy burden on crude produced from marginal fields as well as redevelopment areas in Mumbai High.
There are around 8-12 marginal oil-fields that are ready to produce. ONGC holds about 165 marginal fields (including offshore and onshore), of which some are producing oil and gas and the remaining are in appraisal stage.
Today, all crude oil produced by ONGC is sold to public sector oil refiners at a discount, which is capped at $56 a barrel.
“During 2013-14 we got a net crude price of $41 a barrel after the under-recovery discount; after factoring in cess, royalty and VAT/CST, it came to $25 a barrel,” Sarraf said, adding that “we would be comfortable if we got $65 a barrel after accounting for under-recovery discount.”
ONGC has been consistently asking the Government to allow it to charge a higher price for crude produced from these fields.
The public sector exploration major has said that all its calculations on starting production from the marginal fields have gone wrong because of the subsidy calculation.
The post-discount price of $40.97 a barrel during the 2013-14 fiscal had increased its subsidy-sharing by 14 per cent to ₹ 56,384 crore. In the fourth quarter of fiscal 2013-14 ended March 31, 2014, the company had a gross revenue of ₹21,403 crore and registered a net profit of ₹4,889 crore.