Covid-19 leads to sharp decline in crude prices: ONGC chief

Richa MishraNew Delhi, April 5 New Delhi | Updated on April 05, 2020

Oil and gas major wants govt to implement policy measures to mitigate crisis

The Covid-19 pandemic, coupled with extreme volatility in crude oil and gas prices, will leave the oil sector gasping for energy in the long-run. To overcome the impact of the crisis, public sector oil giant ONGC wants the government to address all pending issues, including the freeing of gas pricing in India.

Fall in demand

The pandemic crisis has triggered large erosion of demand globally, resulting in a sharp decline in crude prices, said ONGC Chairman and Managing Director Shashi Shanker.

“This will definitely have an impact on our bottomline in the near future. Global crude oil prices are regulated by fundamentals and prices cannot sustain at such levels for long as we are witnessing today. Historically, in previous instances of sudden oil price declines, the recoveries have also been sharp and, in some cases, V shaped,” he told BusinessLine.

The ONGC Group is balanced across upstream, midstream and downstream business in the hydrocarbon value chain, he said, adding: “This makes us better prepared to withstand crude oil pricing cycles. In low price part of the cycle, while the upstream business revenues may be challenged, the refining business margins may neutralise the effect to some extent. Nevertheless, the ONGC board has taken a close look at the emerging scenario and decided to adopt a balanced approach towards capital spending.”

“While we are not seeking any subsidies from the government during this time (the government is already challenged in dealing with the current scenario), we strongly feel that the time is ripe for implementing certain policy measures that are at various levels of government consideration,” said Shashi Shanker.

“If some of those measures are implemented in this juncture, that will equip the upstream companies to not only tide over the current situation but also to address the energy security of the nation in a better way in the long run,” he said.

“We have been able to maintain the production output at the same levels compared to the pre-corona time. All our staff at offshore, onshore and plants are committed to maintaining the production of oil, gas and value-added products to enable the nation tide over this national crisis. Due to coronavirus, there is less offtake of gas and VAP for which production levels have been reduced marginally,” he said.

When asked how ONGC prepared itself for the pandemic, he said the upstream oil and gas sector is known for dealing with uncertainties. “In the last 64 years, there have been various occasions where ONGC had to deal with uncertainties that arrived without any forewarning. ONGC, having complex operations involving engagements with diverse technological partners from around the world, started guarding itself, its employees and partners very early and quickly to the threat from novel coronavirus as it began to emerge significantly across the world,” he added.

Thermal screening

Elaborating he said: “Our offices were issued notices as early as third week of February to start thermal screening all incoming persons at our premises. The entry of all non-essential persons and visitors was restricted. Meanwhile, ONGC asked employees to prepare and be technologically ready to face any restriction on movement and office attendance if needed to be imposed.”

“Our employees who were on duty at onset of lockdown are continuing to perform on same workplaces such as rigs and platforms with extended duty periods. Continuous interaction through video conferencing was done by the top management, and our employees at onshore and offshore installations voluntarily offered to extend their stay at their locations,” he added.

Necessary orders were issued by the management to this effect and change in shift timings wherever necessary were implemented, he said adding: “Large numbers of our executives were working from home to ensure support to our employees in the fields and to carry out other necessary tasks,” he said.

When asked how is ONGC dealing with contract employees, he said: “Obligations towards all those contractual employees who are directly associated with ONGC would continue to be honoured during these crises. We, as principal employer, have advised our business partners also to continue honouring their commitments to all casual workers employed with them. Payment to the contractors is being released and they have been advised to pay the workers by April 7.”

Published on April 05, 2020

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