State-owned Oil and Natural Gas Corp (ONGC) has arrested the decline in its crude oil output and will for the first time in several years end the fiscal with stable production, its Chairman Dinesh K Sarraf said.
ONGC over the past decade has seen its output dip by at least 2-3% annually due to declining productivity at its main fields, which are very old and matured.
"Declining trend in production has been arrested. We would have stable production after several years," he said.
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"The production decline rate globally is 6-8%. If our overall production is stagnant, that means there is increase in production somewhere," Sarraf said.
Oil production from offshore fields, mainly off the west coast, has increased 8-10% this fiscal but there has been a dip in output from onland fields.
"We made 16 new discoveries in first nine months of current fiscal as compared to 14 in the whole of the previous year," he said adding these as well as the ones made in the past are being slowly brought into production.
ONGC's fields are as old as 50 years. Its prime Mumbai High, which accounts for nearly 60% of its oil production, is 40 years old.
In past six months, four projects with a total capex of Rs 22,500 crore, to bring discoveries to production or raise output from existing fields in the western offshore, have been approved, he said.
ONGC, which has been under scrutiny of the Petroleum Ministry for falling output in the last few years, is targeting 23.51 million tonnes of oil this year. Next fiscal, the production is projected to rise to 24 million tonnes and will reach 28-29 million tonnes by 2019-20.
Sarraf said most of easy oil has been discovered and produced and what is now being brought into production are smaller pools, monetisation of which was either technologically difficult or entailed high cost.
The drop in oil prices to near six years low of $44 per barrel have made things difficult as producing from marginal fields as well as difficult projects is economically not viable.
"We believe that such low price is an aberration. Prices will come off these lows and rise. When they start to increase is difficult to say but prices have to be higher," he said.
Like in oil, ONGC is also scripting a turnaround in natural gas production with newer fields in eastern as well as western offshore will help the company raise output to 116 million standard cubic meters per day by 2019 from current 64 mmscmd, he said.
