Govt upset with ONGC's poor recovery

Petroleum secretary attributes this to absence of partners with cutting-edge technology.

The country's largest upstream company "" Oil and Natural Gas Corporation (ONGC) "" appears to have fallen foul of the government.

Petroleum Secretary MS Srinivasan today said he was unhappy with the company's inability to increase recovery of crude oil from proven reserves.

"The recovery rate seems to have been stuck at 28 per cent. I wrote to them a week ago regarding this," said Srinivasan.

The secretary said the recovery rate of the biggest companies in the world was close to 45 per cent, which could go up to above 55 per cent in the next 10-15 years. Norwegian company Norsk Hydro, for example, is evacuating over 50 per cent hydrocarbon from proven reserves.

Attributing the low recovery to absence of partners with high technology, Srinivasan said he would put pressure on the companies to take on board foreign partners with expertise in exploration.

The companies offer unattractive terms and turn away prospective partners, according to Srinivasan. "I have asked the national oil companies to work their contracts so that technology companies are attracted to share their expertise," Srinivasan said.

An ONGC official said Srinivasan was referring to the company's memorandum of understanding with Royal Dutch Shell, which was signed a year ago but yielded no result. "We do want Shell's technology, but the conditions they are offering are not acceptable to us," the official said.

He also critcised national oil companies for high cost structures and inefficiencies. "Disincentive for cost-cutting is oil bonds," he said.

The secretary's attack on ONGC comes days after he told reporters at an ONGC press conference that the upstream major should not be criticised, as the company would soon announce the volume of its natural gas discovery in the Krishna-Godavari and Mahanadi basins. "ONGC will soon come out with some good news for the nation," he had said.

Srinivasan said that the world was far away from peak production of oil or peak oil, since only 1 trillion barrels of the total global reserves of 3 trillion barrels of crude oil had been consumed so far.

Srinivasan also said the government was not keen on ONGC expanding into non-core areas. "It should manage upstream more efficiently and effectively," he said.