News Detail

Following are the minutes of Half Yearly Performance Review Meeting for Annual Plan 2012-13 of Ministry of Petroleum & Natural Gas held on 03.09.2013. Member (Energy) welcomed the participants and invited Secretary MoPNG to start the discussion.

Initiating the discussion, Secretary MoPNG provided a brief outlook of crude oil production in the country for the next four to five years. He indicated that some increase in crude oil production may be witnessed in the year 2014-15 which is likely to reach the level of 44-45 million tonnes and thereafter, the production is likely to decline to the current level by the year 2016-17. He pointed out that no major break-through has been noticed in the E&P sector except the CAIRN fields in Raiasthan. However, he informed that production from these fields is likely to be maintained at current level, there are also chances to step up the production based on the FDP submitted by CAIRN. However, their cost parameter is not firmed up to consider it for calculation of Pre-tax Investment Multiple (PTIM). 

Member (Energy) enquired whether provisional cost can be worked out considering the same assumptions as submitted by the contractor in the Field Development Plan (FDP). DGH may explore if such provisional costs tor PTIM may be a good assumption to consider approving the FDP and revise the same as production profiles and prices become firmer. 

Member (Energy) raised the Issue of energy security and stated that there is a need to enhance the production from all sources in the need future, both from the fields of ONGC and other operators. He also enquired about the current production  realisation from  the EQR/IOR activities and the position of such activities in the marginal fields.
JS (Exploration) informed that there are about 1 65 marginal fields for which, economics are not working out due to current pricing regime, ONGC is struggling to take out production from the marginal fields due to less price realisation of crude. It was informed by Director (Finance), ONGC that their proposal to the Government regarding exempting production from marginal fields from subsidy contribution is still un-decided.   

Member(Energy) suggested that initiatives may be taken up on curtailing internal consumption of gas. It was noted that only 82 percent actually comes out as production and about 18 per cent goes into shrinkage/consumption by the infrastructure created at the exploration and production sites. By suggested that if need be, a committee be set up to examine the internal consumption level. It was also observed that it would be beneficial to have low pressure gas compressors to save losses in flaring. 

Citing some examples, ONGC painted that while taking the costs of compressors, the economics do not work. Therefore, some dispensation needs to be allowed. Member (Energy) suggested that such possible savings may be examined at MoPNG level and a dispensation given. 

On the discovery of Oil and Gas fields, Director General, DGH stated that about 188 discoveries have been made so far under NELP and pre-NELP regimes. Out of these, 23 discoveries are under production and rest ore under various stages of developments and 30 discoveries are relinquished/ uneconomical far production. Member (Energy) enquired about both the gas as well as oil reserves position tor the country and asked DGH to provide all the details. 

He also pointed out that we have to look into possible alternative strategies to enhance indigenous production from the PSC regime.He suggested that MoPNG should take up the matter and monetise the productions from the sedimentary basins keeping in view that the policy should have retrospective effect also to re-examine the discoveries which were earlier deemed unvlable. Some of the NELP fields which were not viable at Price US$ 4.2/MMBTU may be viable with the recently announced price by the Government, He raised the concern that putting the blocks of such rejected discoveries under re-bidding will again go back to the same process and will take lot of time. He opined that in the interest of the sector policy complications may be obviated by providing reasoning/explanatory note. 

Oil India Ltd. stated that their production trend of 4 to 5 per cent growth has been affected due to Law and Order problem In the North-East region. Secretary, MoPNG informed that Nagaland government has invited bids on their own for developments of fields which was unconstitutional.   

On the issues of direct benefit transfer, MoPNG stated that 209 districts have been covered under the scheme from January 2013. They also stated that the issue of third party audit has also taken into consideration. Member (Energy) stated that the latest report in this regard of the successes so far, must be disseminated, MoPNG further informed that the import of LPG has reduced quite significantly and there is further reduction anticipated in the growth.  

Lastly Member (Energy) wanted to know the status of under recoveries. ED, PPAC stated that the under recoveries basically depends on three factor.

1. Crude Oil prices
2. Consumption growth of products
3. Rupee depreciation

Member (Energy) enquired that with the decision of the Government to increase diesel prices every month, how much net impact is there on the under recoveries side. ED, PPAC staled that about INR 16-17,000 crores net impact would be there.  

ED, PPAC also informed that there has been negative growth in diesel consumption and while the consumption of Petrol has increased substantively.  It was also informed that diversion in LFG cylinder has much reduced and there has been reduction in growth of about 7.3 per cent in LPG cylinder. An effort has been also towards introducing 5 Kg cylinder scheme for the benefit of low income group people.  

Member (Energy) enquired about diversifying of our crude Imports from countries like Venezuela, Columbia and Nigeria and suggested that MoPNG should work- our overall economics as to which sources may be more economical.

Source: SNP Infra Research