ONGC to fall short of output target this fiscal

Oil and Natural Gas Corporation (ONGC), India's largest oil and gas producer, will see crude output fall short by 1 million tonnes of the targeted 25.76 million tonnes this fiscal.

"Production is declining faster than anticipated," ONGC Chairman and Managing Director R S Sharma told reporters here.

The output is declining as fields like Mumbai High, Neelam and Gandhar mature and age, he said.

The company plans to bring into production smaller and marginal fields to increase output. "We anticipate output will rise to 27-28 million tonnes by 2012-13," he said.

ONGC saw production fall 3 per cent in the December quarter to 6.7 million tonnes, while natural gas output rise was almost flat at 6.45 billion cubic metres.

Sharma said ONGC board has approved an investment of Rs 2,163.65 crore for integrated development of D1 marginal field in Mumbai offshore. The project will be completed within 27 months from the date of award.

Peak envisaged oil production from D1 field is expected to be about 36,000 barrels of oil per day during 2012-13.

The board also approved investment of Rs 723.64 crore for acquisition of a new Multi Support Vessel (MSV). ONGC at present has a fleet of 4 MSVs, out of these 2 MSVs are owned by ONGC and 2 MSVs are hired. The scheduled date of commissioning of this MSV is September, 2012, he said.

The ONGC board has also approved the draft of the Memorandum of Understanding (MOU) to be entered with Bharat Petroleum Corporation (BPCL) for cooperation in gas and LNG business.

ONGC Videsh Managing Director R S Butola said the overseas investment arm of ONGC is planning to spend about Rs 8,600 crore next fiscal mostly on existing operations. The capital expenditure in this fiscal was Rs 7,000 crore.

"We want to consolidate. Our philosophy will be to selectively expand and expanding in countries where we already have operations," he said. "We can go into new countries only if the offer is irresistible."

The capital expenditure for next fiscal would be mostly met through internal accruals which are Rs 4000-4,500 crore this year and would rise slightly next fiscal, he said.