The ONGC is all set to auction 60 more ‘marginal oil fields’ to the private operators through the Production Enhancement Contracts (PEC) as many former officials of the PSU are joining hands with the Private Investors for the ‘liquid gold rush’ through the controversial PEC.
Under PEC, the private company invests and introduces comprehensive technologies to improve production, while the ownership of the fields rests with ONGC. In January this year, the government allowed state-owned explorers to rope in the private sector to raise production to better exploit its hydrocarbon resources and cut dependence on foreign oil.
But that is not true in the ground as using the PEC route, there is an allegation that many good oil fields have been shown marginal and unproductive using fudged data and have been put in the auction for private pick up.
“Sadly many senior OIl and ONGC officials were involved and they are manipulating the data to make these fields marginal. The worst is that in the auctions, even non Hydrocarbon background companies are also getting these fields. In the process, the senior executives of OIl and ONGC who are in league with the Private Companies are making a killing” said a senior source of the employees association of the PSU.
On the other hand, ONGC and Oil informed that these were marginal fields and they comprise just 5% of the total production. ” The private parties are investing and if they extract oil economically they will give a share to the mother company. The investment and technology are their headaches” said an OIL spokesman, trying to stress that PEC issue had been overblown.
“You know well in Assam how Hydrocarbon industry is milked by whipping up regional emotion using the privatization route. This is an age-old practice by dozens of organizations and we have spent entire career handling them. So these reports and allegations are not new” said the OIL sources.
But many OIL-ONGC insiders point out that data have been fudged to turn good oil field to marginal oilfields so that private investors strike gold and make a killing.
“PEC is a priority as the government is attributing an enormous amount of importance to it. Besides, stagnating domestic production of oil and gas is a major concern. So, as a consequence of that, ONGC has decided to offer its hydrocarbon blocks to other explorers,” a senior source of ONGC said person said.
The small and marginal fields are said to contribute only 5% to ONGC’s total production while 95% of its production comes from 60 large fields. Marginal fields are discovered fields but are considered uneconomical for development at the government-mandated price of $3.69 per million British thermal units for the April and September 2019 period, which is below the cost of production for most fields to be given for PEC. This is however not taken at face value by a section of the OIL and ONGC employees which feel that backdoor privatization was on to these two profit-making companies.