Govt cracks the whip on ONGC

Public sector oil major ONGC is facing tough questions from the Petroleum and Natural Gas Ministry over the delay in developing its East Coast discoveries.

An internal inquiry is being initiated, a Ministry official said, adding that the question was why should ONGC lag when discoveries by other players, including private sector explorers, around the same time have been commercialised.

ONGC had wanted to adopt a cluster approach for its East Coast discoveries (estimated at 11) and had submitted a development plan to the Directorate-General of Hydrocarbons (DGH) in 2012. But with the drop in Reliance Industries’ D6 block output, the public sector operator was asked to come up with a more detailed development plan.

In 2013, ONGC submitted a revised development plan to the DGH. It divided its East Coast development into Northern and Southern Discovery Areas.

ONGC’s East Coast finds also comprise an ultra-deepwater discovery (UD-1). According to early reports, ONGC had made a conservative estimate to produce 6-9 millions standard cubic metre of gas from its East Coast finds by the middle of 2017.

But the development of the field remains way behind schedule.

Besides throwing light on this delay, the inquiry may also lead to answers for ONGC’s allegations that Reliance Industries was drawing gas from its (ONGC’s) adjacent block off the Andhra Pradesh coast. In May, ONGC had moved the Delhi High Court against RIL on the issue, and had also made the Ministry and the DGH respondents on grounds that the two had not done enough to protect the public sector entity’s rights.

A miffed Ministry felt that if this was the case (RIL drawing gas from ONGC’s finds), then ONGC should have raised it earlier. Gas production in the RIL-operated Krishna Godavari Basin D6 block started in April 2009, but ONGC has never complained, said another official.

In fact, in its counter affidavit, the Ministry termed ONGC’s allegations against the Government as ‘frivolous’ and said that it had never raised any issue on connectivity of reservoirs/channels since April 2009. ONGC woke up only in 2013. The Ministry, in its submissions to the court, had sought rejection of ONGC’s application.

The case, which was posted for hearing on August 29, has been adjourned. It is now expected to be taken up in January.

Meanwhile, ONGC and RIL have asked Texas-based DeGolyer and MacNaughton (D&M), an international petroleum consultant, to assess ONGC’s claims.

Ideally, the two majors should have resolved the issue across the table, as these are natural geological concurrences and not manmade boundaries, but much has happened since.

In the KG Basin, ONGC has Godavari block (G-4) and one NELP-I (KG-DWN-98/2 KG-D5) block adjacent to RIL-operated NELP-I block (KG-D6). While RIL is producing gas from the D-1 and D-3 fields in the D6 block since 2009, ONGC is yet to start developing the discoveries in its blocks.