It makes sense for ONGC to invest abroad: Montek

Planning Commission deputy chairman said domestic investments were unviable at the prevailing low prices

With Oil and Natural Gas Corporation (ONGC)’s net realisation coming down drastically for domestic projects, Planning Commission Deputy Chairman Montek Singh Ahluwalia said it made sense for the state-run company to invest abroad. He said domestic investments were unviable at the prevailing low prices.

“While ONGC is getting only $60 a barrel for domestic crude oil production, it makes sense to invest abroad, as they get $110 by importing,” said Ahluwalia at a KPMG summit here.

According to ONGC officials, net realisation for the first half of the financial year is $42.56 a barrel, with the first-quarter figures falling as low as $40 a barrel.

The company has written to the government seeking a higher retention amount of $65 a barrel from this. Echoing his voice, Petroleum Minister M Veerappa Moily said: “Our national company ONGC Videsh is present in 16 countries. Though its total production from assets abroad is eight million tonnes, it has set a target of reaching 20 million by 2017-18 and 60 million by 2029-30.”

India’s oil exploration and production companies are in 20 countries: Vietnam, Russia, Sudan, Myanmar, Iraq, Egypt, Syria, Cuba, Brazil, Kazakhstan, Gabon, Colombia, São Tomé and Príncipe, Trinidad and Tobago, Nigeria, Venezuela, Oman, Yemen, Australia and Timor-Leste. “To secure energy security, our oil public sector units have planned to invest $22.95 billion in the 12th Plan period.”

“Indian coal is priced much below imported coal. Even after price is adjusted in terms of calorific value, it is low. We should try to align the domestic coal price to the global one. Passing of higher costs of imported coal is unavoidable. In natural gas, the situation is even worse; when we are importing at $14-15 an mBtu (metric British thermal units), the domestic prices are $4.25,” Ahluwalia said.

“With elections round the corner, people say prices would be cut 30 per cent. It has to be seen how realistic they are.” He said renewable energy be seen as a long-term prospect and policy be in a way conventional energy sources be taxed, with a higher price, and should aid renewable sector with that additional subsidy.