ONGC bucks trend to build assets as oil prices ease

Global oil majors have slashed spending and cut jobs in response to plunging oil prices but state-owned Oil and Natural Gas Corp (ONGC) is using the slump to build assets.
Oil majors including Shell, Total and BP have cut capital spending by at least USD 14 billion this year in response to the plummeting oil price.
Addressing company shareholders, ONGC Chairman and Managing Director Dinesh K Sarraf said energy industry, particularly the oil and gas sector, was facing challenging times due to the collapse of crude prices.
Oil prices, he said, have collapsed from USD 110 per barrel to sub-50 dollars a barrel due to lower growth in demand than expected from China, slow recovery in some of the developed economies and steady build-up of new supplies backed by strong North American output.

"While many of the global E&P companies have responded to this situation by cutting down their investments, ONGC takes this as an opportunity to build its assets in this environment of lower costs as well," he said.
ONGC, he said, remains "steadfastly committed to the quest of energy security, a national priority endorsed by none other than our Prime Minister."

Sarraf said ONGC has stepped up ongoing development efforts to bring new hydrocarbon volumes into the country's energy basket. "Important projects have been given the go-ahead for development and more proposals to monetise our reserves are under various stages of finally being approved."

Having reversed the decline in crude oil production in 2014-15, ONGC is now fully focused on implementing programmes to raise output from ageing and old fields.
"Every drop counts and ONGC's production track record from its predominantly mature portfolio and commercially prudent and holistic management of producing assets is really remarkable," he said.
Improved Oil Recovery and Enhanced Oil Recovery projects to maximise production have yielded positive outcomes - in 2014-15 over 34 per cent of ONGC's crude production was a result of investments in these projects, he said.
"In fact, effective and judicious deployment of technological interventions have enabled your company to reverse the decline in domestic crude oil production in the last financial year," he told shareholders.

Overall decline rate of ONGC's mature portfolio is 2 to 3 per cent compared to 6 to 7 per cent encountered globally in similar fields.
Sarraf said ONGC has invested Rs 36,187 crore in these projects and realised an incremental oil gain of close to 95 million tons till FY'15.
The dollar value of the incremental production from these projects in FY'15 alone stood at USD 4.5 billion - around 4 per cent of country's forex outgo on imports.