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Oil and Natural Gas Corporation (ONGC) is confident of upping production to 28.6 million tonnes of crude in current financial year as it is expanding its capacities. In FY13, the state-run upstream firm produced 26.12 MT from its reserves
Oil and Natural Gas Corporation (ONGC) is confident of upping oil production to 28.6 million tonnes in current financial year as it has embarked on an expansion programme. In FY13, the state-run upstream firm produced 26.12 MT from its reserves.
The firm has recently launched production operations from its onshore marginal gas fields (fields that are nearing an end to their commercial lives) in Krishna-Godavari Basin at Ponnamanda. Altogether, it has 110 marginal fields across India, a few of which have been allotted to private parties.
However, the firm has been missing production targets in previous quarters, but the company's chairman and managing director, Sudhir Vasudeva, is hopeful of achieving the set target in FY14.
In an interview with CNBC-TV18, Vasudeva said though the firm derives 72 percent of the production from fields which are anything between 37-52 years old, it has yet maintained production level. "We have introduced improved oil recovery (IOR) and enhanced oil recovery (EOR) schemes by which we manage to arrest decline," he said adding that around 39 of its fields are in small clusters and once the firm starts production there, it will see significant jump in output.
Below is the verbatim transcript of Sudhir Vasudeva's interview on CNBC-TV18
A: On production, things are looking up. We will be increasing production in this FY14 because many of our marginal fields on which we have been doing projects, will fructify and increase production. Last year, we ended up producing 26.12 million tonnes and the target for FY14 is 28.6 million tonnes, a jump of more than 2.5 million tonnes.
With regards to subsidy, we have not heard anything officially and in the first nine months we have already paid Rs 37,000 crore. Even if there is any effect of the reforms that have taken place in terms of increase in diesel prices, it will not have much effect only for the last quarter. I do not think that the subsidy burden would be significantly less for the fourth quarter and should be on the same order.
Q: On production targets some concerns have been arising both in terms of the fact that ONGC has been missing its targets over the last few quarters and are dealing with more and more aging fields. Are you confident of achieving the target that you set out for next year?
A: Absolutely, 72 percent of our production is coming from 14 fields that are anywhere between 37 years to 52 years old. It is impossible to maintain production from these kind of fields. Only because of the efforts taken by ONGC for schemes on improved oil recovery (IOR) and enhanced oil recovery (EOR), we are able to atleast maintain production to these levels.
The production from vintage fields falls at the rate of 7-8 percent and we are also witnessing the same. Due to IOR and EOR schemes, we are able to arrest this decline to a very small level and that is why the production looks stagnant at 25-26 million tonnes. About 39 fields are in small clusters, 13 such schemes are there, once we put them on, we will be seeing a jump in production in this fiscal.
ONGC stock price
On March 11, 2014, at 11:18 hrs Oil and Natural Gas Corporation was quoting at Rs 319.65, up Rs 0.55, or 0.17 percent. The 52-week high of the share was Rs 353.00 and the 52-week low was Rs 234.40.
The company's trailing 12-month (TTM) EPS was at Rs 24.07 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 13.28. The latest book value of the company is Rs 145.47 per share. At current value, the price-to-book value of the company is 2.20.
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524.45 -20.46 -3.75%
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