Aiyar praises Raha, slams ONGC

Petroleum Minister Mani Shankar Aiyar is believed to have told Prime Minister Manmohan Singh that ONGC Chief Subir Raha was a "terrific" CEO, but his company had not done enough to boost domestic oil and gas output.

Aiyar is understood to have told the energy coordination committee, headed by the prime minister, on December 16 that Oil and Natural Gas Corp had a "very poor" track record in finding new oil and gas fields in India and that it had neglected exploration and production - its core competence - for its downstream refining, power and petrochemical projects, sources said.

His eight-minute presentation on the country's oil production scenario focused mainly on ONGC's failure to put the riches it reaped because of sharp rise in international oil prices.

Aiyar said ONGC was signing pacts with state governments for power and petrochemical projects but was refusing to sign a performance MoU with the petroleum ministry.

Rather than investing in finding oil under the Deccan plateau, which Aiyar claimed to have more oil than the Gulf, ONGC was concentrating on acquiring oil properties abroad.

Sources said when Finance Minister P Chidambaram pointed that Aiyar's views on ONGC could have been a reflection of his alleged spat with ONGC Chairman Raha, the petroleum minister emphatically stated that Raha was a terrific CEO and that he had no issues with him. He said he was only raising fundamental issues concerning India's energy security.

Chidambaram said India's energy security issues would be served as long as ONGC got the set quantity of oil either from its domestic fields or its overseas assets and wanted foreign firms to explore the Deccan plateau rather than a company with "poor track record".

Sources said Chidambaram disapproved of ONGC being asked to explore the deccan plateau saying accoding to Aiyar's own assertion, the company had very poor track record and this amounted to putting good money behind bad money.

If sources are to be believed, the prime minister asked the petroleum ministry to put down its views on ONGC's performance and the company's response and make a presentation to the ECC at a future date.

While Aiyar asserted that ONGC's oil production from existing fields would fall to 19 million tonnes, the company is on record saying it had arrested the natural decline that sets in old fields and is using improved technology to raise output.

The oil PSU will produce 26.88 million tonnes of crude oil in 2005-06, down from 28.13 million tonnes last year, and is projecting an output of 29.09 million tonnes next fiscal.

Raha has said ONGC's integration plans, which involved forays into liquefied natural gas (LNG) imports, petrochemical plants and power projects, had no bearing and impact on its E&P spending.

Of the Rs 12,251 crore being invested in E&P in 2005-06, one-third is going into exploration finding new fields and the remaining into putting new fields on production and increasing production from the existing ones.

Raha had said that of the Rs 75,339.87 crore capital expenditure planned for the 10th five year plan period (2002-2007), Rs 47,951.72 crore or 64 per cent, was in domestic oil hunt, Rs 24,968.33 crore or 33 per cent, in overseas asset acquisition, and only Rs 2,419.82 crore, or 3 per cent, would go into integration projects.