Overstated output led to Rs 18,627-cr ONGC burden: CAG

The comptroller and auditor general (CAG) of India on Monday said the state-run ONGC (Oil and Natural Gas Corporation) overstated its production, thereby bearing an additional subsidy burden of Rs 18,627 crore between 2011-12 and 2014-15.

The company had to bear a larger share of subsidy due to overstatement of reported crude oil production by inclusion of natural-gas condensate and off-gas (seven per cent of condensate and one per cent of off-gas). The additional subsidy burden borne by the company due to inclusion of condensate was Rs 16,331.9 crore and due to the inclusion of off-gas was Rs 2,294.7 crore, it said. During the period under review, ONGC has borne a subsidy burden of $56 per barrel of its total production of crude oil. Condensate is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural gas fields.

In its response to the auditor, ONGC said that it has been taking up the issue of exclusion of condensate from overall crude oil production with the ministry of petroleum and natural gas at various levels over the period from October 2012 to May 2014. On the other hand, since the third quarter of 2015-16, off-gas has been shown separately in the crude oil tally statement given to the ministry.

In the report, CAG said that ONGC had said that condensate was neither crude oil and nor was it sold.

However, the company has been reporting production of crude oil inclusive of condensate since 1990."It is this incorrect practice of reporting condensate as crude oil, even as the company was aware of the difference of the two, that has led to the present situation of additional subsidy share on this account."

CAG added that the company may report condensate as a separate stream as opined by an international consultant. By including basic sediment and water of 3.9 per cent, off-gas one per cent, and recoverable internal consumption of 0.12 per cent, the production performance was overstated, it said.

CAG highlighted that there was an incorrect reporting of crude oil in Ankleshwar asset. Crude oil from various fields at Ankleshwar is transported to Indian Oil Corporation refinery in Koyali through a pipeline. On February 18, 2013, this pipeline was punctured by miscreants to steal crude oil. The security team of the asset reached site on that day and seized 550 litres of crude oil. "However, in the crude oil tally statement as on March 2013, the asset indicated pipeline leakage of 3,556 mt as against a reported theft of 550 litres. The excess reporting was done to reconcile the differences between reported production and sale of crude oil by the asset," CAG said.