ONGC directed to put its oilfields for sale by Oil Ministry

The oil ministry is considering breaking up ONGC, the country's largest oil explorer into smaller units, privatise its major oil fields and privatising the smaller discoveries.

ONGC has been directed to sell their investment in producing oil fields such as to Ratna R-Series to private companies, findoverseas partners in KG basin gas fields, monetise existing infrastructure, and to increase productivity by separate drilling and other services into different companies.

On April 1st, a day after chairman Shashi Shanker's retirement, the ministry delivered the organisation an "action plan." Acting chairman and director Subhash Kumar is given just four days to reply to the letter from additional secretary Amar Nath, Kumar is to answer back by April 5th.

The “action plan” is called ‘ONGC Way Forward’, a seven-point action plan that will support the company in increasing its oil and gas production by one-third by 2023-24.

The plan recognises the offshore fields of Ratna-R and Pana-Mukta, along with that of the onland sector of Gandhar in Gujarat, as potential sites for bringing in private partners.

The KG-DWN-98/2 gas venture worth $5 billion, the Deendayal West block which was purchased from GSPC for $995 million and the Ashoknagarnear Kolkata have all been identifiedas investment for “global majors as partners”.

In addition, the ministry requires the firm to look at forming independent organizations for drilling, workover services, logging,well services and data processing.

According to a ministry note dated April 1st, 2021 ONGC's contribution to the country's oil and gas demand is declining steadily because its production has been stagnant or declining for a long time. As a result of which import reliance is growing.

It is to be noted that this is the oil ministry's third bid to persuade ONGC to sell its oil and gas fields during the Modi administration.