DGH rejects ONGC plan
By Our Corporate Bureau | 24 Oct 2001
ONGC had submitted a plan to DGH for redevelopment of the Bombay High Oil Field, entailing an investment of Rs 8,300 crore, which on implementation would have led to an improvement in recovery and output by 3 to 4 per cent by the year 2030. But, the same has been rejected by DGH on the grounds that the increase of 3 to 4 per cent, as envisaged by ONGC, is too little and should be at least in the range of 7 to 8 per cent.
Terming the investment figure monumental and imprudent, DGH has pointed out that the investment figure entailed by ONGC is too high in comparison to the returns projected by ONGC. Its like saying the risk-reward ratio is below the desired comfort levels.
DGH sources have expressed surprise at the projections given by ONGC, which are low and inadequate despite the technology available in the country. The sources say DGH has also cited ONGCs poor track record as one of the reasons for rejecting the proposal, pointing out that ONGCs previous schemes have failed to achieve what they had planned.
Giving an example, DGH has pointed out that the higher output of 3 to 4 per cent, which ONGC has projected to come about by the year 2030, should have been possible by the year 2010, going by what ONGC has said in its earlier estimates.
ONGC had said that if the redevelopment scheme is allowed to go through, it could result in additional revenues of Rs 35,400 crore to Rs 47,200 crore, based on a price of $25 per barrel of crude. This is in accordance with analysts estimate that if the output goes up by 10 per cent, ONGC, at the rate of $25 per barrel of crude, would earn additional revenues of Rs 1,18,000 crore.
To cite some statistics for readers, Bombay High North, as per figures given by ONGC way back in 1985, was projected to produce 105 million tonnes of oil by the year 2000 against which the actual production has been only 90 million tonnes, down by about 14 per cent. DGH says lower production of oil has come about despite ONGC having drilled 65 additional wells.
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