Is ONGC Losing Its Power?
Oil and Natural Gas Corporation (ONGC) might not remain India’s pride and Kohinoor anymore. A few weeks back, oil ministry started asking for it to sell off oil fields, hive off drilling and other services.
The news doing rounds is that ONGC is being pushed to get itself privatized under the Modi government.
Another reason for the offload is that the oil ministry wants ONGC to explore creating separate entities for drilling, well services, logging, workover services and data processing entities.
The public sector undertaking has been taking hefty loans from public sector banks to fulfill its acquisition targets. This is rather ironic.
In end of April, ONGC was told to sell stake in producing oil fields such as to Ratna R-Series to private firms. India’s largest oil and gas producer was also told to think about roping in foreign partners in KG basin gas fields, monetize existing infrastructure, and hive off drilling and other services into a separate firm to raise production.
It must have come as a blow to them, but under the Modi government, investment to include foreign participation is high on agenda. Apparently, Amar Nath, the additional secretary (exploration) in the Ministry of Petroleum and Natural Gas had already written to ONGC Chairman and Managing Director Subhash Kumar, firmly suggesting a seven-point action plan, ‘ONGC Way Forward’ that would help the firm raise oil and gas production by one-third by 2023-24.
The ministry has been pushing ONGC to offload smaller fields and concentrate only on the bigger ones. But the resistance from ONGC has been persistent. The ministry note of April 1, 2021 has already stated that two years have elapsed since the Cabinet decision and non-performing fields need to be identified for divestment and privatisation.
Meanwhile, the company’s shares are losing steam at the stock exchange. Its top employees are getting kidnapped in Assam, to the dismay of the company which is under pressure to rope in foreign investors sooner. Its cost of extraction has been rising and its non performing fields have also been under scrutiny.
Without a clear road map for success, the future of ONGC looks bleak in the coming months.