Ongc Costs Lower Than That Of Global Giants: Mckinsey

Oil and Natural Gas Corporation, (ONGC), operating cost per barrel is lower than many global oil giants, says McKinsey & Co in the first part of its 18-month study on the oil navaratna's recast. The Corporation also compares favourably with these giants in terms of its reserve-t-production ratio.

"ONGC has certain fundamental competitive advantages that result from a large pool of skilled scientists and access to high quality acreage," says the global consultancy firm.

It has compared ONGC's costs with other companies in three operational areas, finding and development, lifting and drilling. While the finding and development cost comparisons are an average for the period 1991-1995, the lifting and drilling costs are for 1994-95 only.

It shows that in finding and development cost, ONGC's cost is higher than Chevron, Mobil and BP (British Petroleum) at $5.18 per barrel, but lower than Shell's at $6.05 per barrel.

In lifting, ONGC forges ahead with a cost of only $1.78 per barrel, while BP's cost is $2.45, Exxon's, $3.31 and Shell's $4.11 per barrel. Mobil is the highest at $5.16 per barrel.

In offshore drilling, for a range of 1500-2000 metres, ONGC produces crude at $723 per metre, while the cost in US wells is $1,098. In onshore drilling, ONGC's cost is higher and compares less favourably with other companies.

ONGC's R/P ratio is higher than Western oil companies, but this is more due to lower rate of exploitation of discovered reserves.

At 23.0 ONGC's R/P ratio is lower than Saudi Aramco at 84, but higher than Shell with 14.4, Exxon with 13.5, BP with 13.2, Chevron with 11.7, Amoco at 11.6 and Mobil 11.2.

The McKinsey report has contended that ONGC has the ability to face the challenges and embrace opportunities.

"ONGC possess the intrinsic capabilities to make fundamental changes. In recognition of this, the government has identified ONGC as one of the navaratnas," summarises the report.