ONGC invested Rs 81,890 crore for raising output

India's largest oil and gas producer ONGC on Friday said it has invested Rs 81,890 crore (Rs 818.9 billion) in bringing on stream newer discoveries and arrest natural decline that has set in its ageing fields.

"Our major oil and gas producing fields are ageing and showing natural decline," ONGC Chairman and Managing Director Dinesh K Sarraf told shareholders at company's annual general meeting.

However, ONGC has taken measures to arrest this trend and uphold production from such fields, he said.

Oil and Natural Gas Corporation has deployed the best-in-class technologies in its Improved Oil Recovery and Enhanced Oil Recovery schemes on these fields.

"Our efforts have paid off well -- with 7.46 million tonnes in FY'14 alone, which is about 33 per cent of ONGC's domestic crude production.

“Thus, till FY'14, a cumulative incremental gain of 87.41 million tonnes has been achieved," he said, adding a total of Rs 41,316-crore (Rs 413.16 billion) capex has been planned for such interventions across 24 projects, out of which 19 have already been completed.

Stating that ONGC was committed to expeditiously develop its oil and gas reserves, he said out of 15 prospective projects taken up for development, 7 projects are already complete and 8 are under various stages of implementation.

Some of these projects like C-24, B-22 Cluster, SB-14, B-46, BHE & BH-35, North Tapti, C-Series and D-1 are already on stream and producing.

"These projects, with an estimated capital outlay of over Rs 40,573.7 crore (Rs 405.73 billion), are geared up to produce additional 45.66 million tonnes of crude oil and 67.44 billion cubic meters of natural gas," he said.

Sarraf said ONGC was focused on development of Daman gas fields in western offshore and oil and gas discoveries in KG-DWN-98/2 or KG-D5 block, which sits next to Reliance Industries' eastern offshore KG-D6 area.

"Development of Daman, a cluster of several discoveries in western offshore, has already been approved by the Board with an investment of Rs 5,219 crore (Rs 52.19 billion), envisaging peak production of about 8.5 million standard cubic meters per day and start-up of production by July, 2016.

"All out efforts are also being made to ensure production from KG-DWN-98/2 by 2018," he said.

During 2013-14, 84.99 million tonnes of oil and oil equivalent gas reserves were accreted, the highest in last 23 years.

Also, ONGC achieved a Reserve Replacement Ratio of 1.87.

This is the 9th consecutive year that your Company has achieved RRR more than one.

India's crude oil production in 2013-14 was largely flat at 37.77 million tonnes as compared to 37.86 million tonnes in the previous financial year.

However, there was a substantial drop in the natural gas output.

The production was pegged at 35.39 billion cubic metres against 40.68 BCM in the preceding fiscal.

While crude oil imports increased by over 2 per cent to 189.24 million tonnes, LNG import remained almost flat at 10.76 million tonnes against 10.90 MT in FY'13.

"As you all know, the growing energy deficit does not augur well for the country’s economic fundamentals.

“The rising import bill is already exerting a considerable strain on country's trade balance.

“Depreciation of rupee vis-a-vis dollar further compounded the problem," Sarraf said.

However, the situation has evidently improved in the current financial year with the drop in international crude prices.

"With the oil prices reaching below $100 per barrel in the recent days and with the relative stability of rupee, the outlook of Indian E&P industry is quite positive," he added.