“OVL [ONGC Videsh Ltd.] is keen to get involved in the development of Sakhalin-3 and they [OVL] are in discussions with Rosneft for this,” Ranjan Mathai said at a news conference. “OVL is also in talks with Novatek to access gas deposits in the Yamal peninsula in the north eastern Siberian region.”

Mathai was briefing the media ahead of Prime Minister Manmohan Singh’s three-day visit to Russia that starts Thursday. Singh will be meeting Russian Prime Minister Vladimir Putin and President Dmitry Medvedev during his visit, Mathai said.

He didn’t say if OVL would sign any deal with Russian energy companies during Singh’s visit. OVL holds a 20% stake in Russia’s east offshore Sakhalin-1 oil and gas field, which is operated by ExxonMobil. Rosneft is exploring Veninsky licensed block of the Sakhalin-3 project, the Russian state oil producer’s website showed.

Independent natural gas producer Novatek’s Yamal LNG project holds the exploration and production license for the South-Tambeyskoye field, which has proved reserves of 418 billion cubic meters of natural gas and 15 million tons of gas condensate, the company’s website showed. Novatek plans to start LNG production in 2016 and eventually reach production of 15 million tons a year.

OVL produced 9.45 million tons of oil and oil-equivalent gas in the year ended March 31, 2011. The New Delhi-based company aims to source 20 million tons a year from overseas assets by 2020, and is looking to pick up stakes in overseas exploration and production assets to realize the target. Apart from its stake in Russia’s Sakhalin, OVL also owns Russia-focused Imperial Energy, which it acquired in January 2009 for $2.12 billion to establish a presence in Western Siberia, one of the world’s largest oil and gas producing regions.

OVL hasn’t been able to ramp up production at Imperial as it seeks tax concessions from Russia to further invest in the field. Mathai said the issue of Imperial’s tax liability is under discussion. “The matter hasn’t been finally settled and will continue to be raised and discussed with the Russian side,” he said.
Agencies

The B-127 cluster, east of Mumbai High oil field, includes marginal fields B-127, B-157, and B-59. ONGC estimates reserves at 15.35 million tonnes of oil equivalent, with 24.6 million tonnes in place in the Eocene Bassein and Paleocene-Eocene Panna formations.

The company estimates total production of 1.836 million tonnes of oil and 2.093 billion cu m of natural gas over 10 years. It also will extend development of B-55 field, northeast of Mumbai High and the B-127 cluster, on production since November 1999 and currently yielding about 2.05 million standard cu m/day from nine wells. The exploratory well B-55-5 produced gas from the Oligocene Mukta formation, warranting further development, ONGC said. The operator expects incremental production of 155,000 tonnes of oil and 2.583 billion cu m of natural gas over 13 years.

Also east of B-127, ONGC reported a discovery in the B-127E-1 well, which during drilling to 2,735 m encountered hydrocarbons in “various intervals” of the target Panna formation. On a test of one of five intervals of interest, at 2,651.5-2,648.5 m, the well flowed 1,076 b/d of oil and 1.9 million cu m/day of gas through a ½-in. choke.
Oil and gas journal

The government had planned to conclude the ONGC share sale by the third quarter this fiscal, but had to postpone it because of weak stock markets and failure to meet the norms on the required independent directors. As per clause 49 of the Sebi regulations, half of the company’s board should comprise of independent directors.

Three of ONGC’s independent directors— S Balachandran, S S Rajsekar and Santosh Nautiyal — retired on November 10 after the three-year term. The official said the Department of Disinvestment (DoD) is awaiting approval of the cabinet committee on appointments (ACC) for the new independent directors on the ONGC board.

DoD is understood to have asked the ministries concerned to fast-track appointment of independent directors, so that they can move ahead with the stake sale programme. Last month, ONGC withdrew the draft prospectus filed with market regulator Sebi shortly before the 90-day deadline. ONGC had filed the FPO prospectus in September.

The government plans to sell 5% stake, or 427.77 million shares, in the company. The government’s holding is expected to come down to 69.14% from the current 74.14% after the sale. The post of independent directors is also lying vacant in other disinvestment bound PSUs — BHEL, RINL, Hindustan Copper and NBCC.

BHEL, which has already filed draft papers with Sebi on September 30 for Rs 4,000 crore FPO, needs two more independent directors on board. Besides, Rashtriya Ispat Nigam Ltd (RINL) needs three more independent directors, while HCL needs five to meet the listing norms to meet the Sebi requirement.

As against the disinvestment target of Rs 40,000 crore in the current fiscal, the government has so far raised only Rs 1,145 crore.
Agencies

“Hydrocarbons shows were encountered during drilling of Panna section in various intervals,” ONGC wrote. “Based on geological information and log characteristics, a total of five interesting intervals have been identified for conventional testing in this well.”

This first object in this interval has flowed oil at a rate of 1076 barrels of oil per day as well as a quantity of gas. “The testing result of the well has opened up the eastern part of B-127 area for further exploration and delineation. Positive testing results of the other objects would also help in incremental value creation for the planned B-127-B-55 cluster,” ONGC continued.

At the NKXV well, ONGC is drilling to a depth of 2205 metres to explore the Kalol, Kadi and Linch formations. “Based on geological information and log characteristics a total of six interesting intervals were identified for conventional testing,” it claimed. The first object in the Kadi formation flowed oil at 174 barrels per day.

“The well N Kadi-472 has produced oil for the first time from MP-IV unit of Mandhali member in N Kadi area. The new pool discovery is likely to open up new areas for exploration and will also contribute for reserve growth and production.”

The strikes were ONGC’s tenth and eleventh discoveries so far this financial year to the end of March.
Upstream online

The 14 projects entailed an investment of Rs 27,305.05 crore. Of these three, Rs 506.22 crore development of D-1 field, Rs 219.77 crore SB-11 development and Rs 1,688.38 crore investment in development of Vasai East in western offshore, have been completed.

Another 11 projects entailing an investment of Rs 24,890.38 crore are under various stages of investment. Singh said the biggest among the projects is B-193 Cluster development at the cost of Rs 5,633.44 crore which would yield 5.57 million tonne of oil and 5.12 billion cubic metres (bcm) of gas in 15 years. The project is scheduled to be completed by June, 2012.

Besides, another Rs 3,241.03 crore is being spent on Cluster-7 development by March 2013 to produced 9.73 million tonne of oil and 4.52 billion cubic metres of gas over a period of 16 years. ONGC is also investing Rs 3,195.16 crore in producing 6.13 million cubic metres of condensate and 15.14 bcm of gas from C-Series field by 2022-23. Another, 2,218.01 crore is being investment in integrated development of G-1 and GS-15 fields in  for producing 0.982 million tons of oil and 5.92 bcm of gas over 15 years period beginning May, 2012.

It is also investing Rs 2,920.82 crore in producing 2.46 million tonne of oil and 6.56 bcm of gas from B-22 Cluster, Rs 2,523 crore in WO-15 Cluster development for 2.83 million tonne of oil and 8.58 bcm of gas and 2,163.65 crore in additional development of D-1 field.

ONGC would also invest Rs 1,456.96 crore in B-46 Cluster development to product 1.68 million cubic metres of condensate and 5.273 bcm of gas in 12 years beginning May 2012.
Agencies

As per norms, all profit-making state-owned firms are required to declare a minimum 20% dividend on equity or a minimum dividend payout of 20% of post-tax profits, whichever is higher.  The Finance Ministry on October 31 wrote to the Oil Ministry saying the minimum dividend payout for PSUs in oil and gas, chemical and other infrastructure sectors would be 30% this year.

While fuel retailers Indian Oil, Hindustan Petroleum and Bharat Petroleum are in the red, ONGC, Oil India and GAIL India have made healthy profits in the first six months of current fiscal. “Dividend from Central Public Sector Undertakings (CPSUs), being a return on investment made by the Government, should be commensurate with the profits of the company.

“A lower than reasonable level of dividend would be construed as an implicit subsidy which the Government can ill afford, given the level of its commitments especially in the social sector, and its obligations to meet the fiscal targets,” the finance ministry wrote. It asked the oil ministry to “ensure” a minimum 30% interim dividend payout by profitable PSUs.

“In case of undertakings with large disposable profits/ healthy cash reserves, higher/ special dividends may also be considered as the guidelines indicate only the minimum level of dividend,” the finance ministry added.

ONGC has seen its net profit jump nearly 41% to Rs 12,737 crore in April-September period. With such profits, it is likely to consider a 30% interim dividend besides a special dividend. Gas utility GAIL reported a 15% rise in net profit in H1 to Rs 2,029 crore while Oil India Ltd (OIL) has seen its net profit jump to Rs 1,988.13 crore from Rs 1,417.14 crore during the period.

On the other hand, oil refining and fuel marketing companies are in the red because the government has not provided them with adequate subsidy for losses they incur on selling diesel, domestic LPG and kerosene below cost. IOC had reported a net loss of Rs 11,204 crore in April-September, while HPCL had a net loss of Rs 6,445 crore. BPCL had reported a net loss of Rs 5,791 crore in H1.

Sources said Oil Ministry has already asked the profitable PSUs to hold board meetings for consideration of the interim dividend.
Agencies

RIL, which had bid for 6 out of the 34 areas offered for exploration under the ninth auction round of New Exploration Licensing Policy (NELP) earlier this year, was ranked number one for the Andaman deepsea blocks, AN-DWN-2010/3 and AN-DWN-2010/4, ahead of a consortia of ONGC and Oil India.

An Empowered Committee of Secretaries (ECS), which reviewed the bids recently, felt that 10.95 per cent profit share offered by RIL was less than benchmark 15 per cent and therefore was deemed very low, sources privy to the deliberations said. ECS in its recommendations, which would go to the Cabinet Committee on Economic Affairs (CCEA), opined that RIL should not be awarded these two blocks, they said.

The panel had gave the same opinion on ONGC’s 6.7 per cent profit share offer for two other Andaman Sea block – AN-DWN-2010/1 and AN-DWN-2010/2, where it was the sole bidder. It also wanted the bid by a consortium of ONGC-OIL and GAIL for deepsea block GS-DWN-2010/1 and that of ONGC-OIL-BPRL for Kerala-Konkan deepwater block KK-DWN-2010/1 also rejected as they offered very low profit share.

RIL lost out to lesser known companies on the four Gujarat and Rajasthan onland blocks it had bid for. Sources said ECS recommended award of only 14 out of the 33 blocks that had received bids. Of the 33 blocks, three in Mahanadi basin off the Orissa coast were to be shelved as they fell in Naval firing/exercise areas.

The panel recommended award of two shallow water and two onland blocks to consortia led by ONGC. State-owned OIL led consortia was adjudged winner for two onland blocks in the Assam-Arakan basin. Deep Energy walked away with two Cambay basin blocks while Focus Energy beat RIL to bag an area in Rajasthan.

The remaining five blocks were recommended for award to companies like Sankalp Oil and Natural Resources, Pratibha Oil and Natural Gas and Pan India Consultants. The government had offered eight deepsea blocks, seven shallow water areas and 19 onland blocks for bidding in NELP-IX. One shallow water block did not receive any bid at the close of bidding on March 28.

The ECS recommended rejection of single bids for 8 blocks where profit petroleum offered to the government ranged betwen 6.6 to 6.7 per cent. It sought assessment of networth of top bidder for three blocks in Cambay and Rajasthan before awarding them.
Agencies

The company estimates, submitted to the oil ministry, put crude oil output at 25.046 million tonne in 2012-13, up 4.74 per cent from revised estimate of 23.912 million tonne for the current fiscal. Its total offshore crude oil production is estimated to go up by nearly 7 per cent to 17.870 million tonne while the same from onshore fields would dip marginally to 7.176 million tonne from 7.209 million tonne in current year.

However for 2011-12, ONGC has revised down the crude oil production target from 24.774 million tonne to 23.912 million tonne. This is lower than 24.418 million tonne output of 2010-11.

For this year, output from offshore fields would fall 4.19 per cent to 16.703 million tonne while onshore output stands up better in comparison at just 1.78 per cent off the target of 7.340 million tonne to 7.209 million tonne.

After accounting for output from joint venture fields like the prolific Rajasthan block operated by Cairn India, ONGC’s total oil production would be 27.268 million tonne in 2011-12. In 2012-13, ONGC is projecting a total output of 28.765 million tonne, up 5.48 per cent from the current year estimate.

But natural gas output has been revised downwards. Gas production (excluding JVs) has been revised downwards from a budget estimate of 23.536 billion cubic metres to 23.192 bcm in 2011-12. This compares to gas production of 23.095 bcm in 2010-11.

Offshore output is expected to fall short of target by 2.54 per cent, from 18.153 bcm to 117.691 bcm.

If JVs are included, the downward revision is smaller, at 0.84 per cent, from an overall budget estimate of 25.451 bcm to 25.235 bcm.

For 2012-13, ONGC is projecting an output of 24.877 bcm, with offshore gas production going up 10.21 per cent to 19.498 bcm. After including joint ventures, gas output has been put at 27.018 bcm.
Agencies

Changpang and Tssori village in the Wokha district of Nagaland have been directly affected by the oil spills. The oil spills have spread 133 sq km into the district affecting another 102 villages indirectly.

The high court order came in reaction to a PIL filed by Mmhonlumo Kikon, executive director of Dialogues on Indigenous Culture and Environment (DICE) in April.

“More than 1,000 villagers in the two villages have been adversely affected by the oil spill from ONGC’s 21 oil rigs. It has damaged crops and poisoned water causing many villagers to lose their eyesight and suffer from other health hazards,” said Kikon.

Kikon mentioned that the locals have been complaining about the oil spills since 1997 but no action was taken. However, the court’s recent order is a positive sign.

“ONGC offered to clean the oil spills if the state government gave it expedition rights in the area. ONGC had started expedition once but was put on halt by the Nagaland government after the locals complained of it,” said Kikon.

In the PIL, Kikon has also sought for Rs 1,000 crore compensation for the damages. “We have consulted the counsels of the Bhopal gas tragedy case to fix the compensation amount as the court order permitted the proposed committee to take help of any of the concerned departments and experts too. The next consideration will be held on March 5 next year,” said counsel Gunedhor Singh.
Times of India

ONGC Chairman and Managing Director Sudhir Vasudeva and other members of the Board of Directors inspected the Ankleshwar oilfield, they said.ONGC struck oil at `Vasundhara’, the first well of the company at Ankleshwar, in May 1960. In mid 1980s, another oil and gas field was discovered by the company in Gandhar.

The oilfields at Ankleshwar and Gandhar account for 25 per cent of total onshore production of the country. However, production from the existing oil and gas wells had been declining over the years, the sources said. The company now wants to spend this amount (Rs 2,200 crore), which has been approved by the Board of Directors, for increasing output from the two oilfields, they said.

“ONGC is deploying latest technologies in collaboration with global players to achieve its goal.” The public sector undertaking is also focusing on the east cost. “Efforts are being made to step up production from Andhra Pradesh on east coast. The output is expected to touch 25 mmcd by 2016-17 and 100 mcmd by 2030.”, the sources said.
Agencies