Upstream major Oil and Natural Gas Corporation (ONGC) has decided to pre-pay expensive World Bank (WB) and Asian Development Bank (ADB) loans amounting to Rs 2,500 crore by July to become debt free.
Subir Raha, chairman and managing director, told a news conference here today that the corporation will pre-pay $300 million to WB and about $ 200 million to ADB. He said the effective half-yearly interest on the loans was coming to 10-12 per cent.
World Bank had in early 1990s extended $450 million to ONGC, of which the corporation's actual drawdown was $411 million. During the same period, ADB sanctioned $250 million to ONGC, of which $ 243 million were actually drawn.
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"We have received government permission to pre-pay the loan and formalities are being completed. The pre-payment of loans would be done from our internal resources," Raha said.
Raha said thus far ONGC has discovered 5.77 billion tonne of oil and oil-equivalent gas, of which 2.1 billion tonnes are recoverable reserves.
"During 2001-02, we added 66.5 million tonnes of oil and oil equivalent gas reserves. Besides 122 million tonne came from our overseas assets, mainly Sakhlain project in Russia and another 2.5 million tonnes was added from our joint venture field," he said.
Dwelling on future strategy, Raha said ONGC would double reserve accretion and improve recovery factor by 40 per cent in next two years.
ONGC has taken up a massive programme of investing Rs 12,097 crore in improving oil recovery in 15 fields.
Raha said Rs 8,200 crore are being invested in improving recovery factor by 4 per cent in Mumbai High fields, which would yield incremental 76 million tonne of oil and oil equivalent gas.
ONGC has also undertaken accelerated development of recently discovered Vasai East, Godavari-I and D-1 fields. Vasai East is estimated to have 98.5 million tonne of oil reserves, while Godavari-1 is estimated to have 15.1 million tonnes of oil reserves. D-1 field is estimated to have 63.47 million tonne of oil reserves, Raha added.
Raha said the corporation is charging a provisional price of $22 per barrel for its crude oil sold to domestic refineries since the dismantling of administered pricing mechanism (APM) from April 1.
Prior to April 1, ONGC was getting a cap price of close to $16 a barrel.
"Dismantling of APM has given us freedom to market our crude at market determined price. Provisionally, we have started charging $21-22 per barrel till such time that pricing agreements are finalised with the refining companies," he said.
The new price would be charged with retrospective effect from April 1. Raha said "we are working on benchmarks for our crude and once the pricing agreement is in place, ONGC's prices will move in tandem with global movements."