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ONGC plans to develop small oilfields

Oil exploration firm Oil and Natural Gas Corporation plans to increase its annual crude output by a million tonnes by developing its idle small and marginal oil fields, a company official told Reuters.

The state-run exploration firm produces 25 million tonnes of crude oil a year but its output has been falling in recent years.

ONGC has 107 small fields, including about 60 off India's western coast, which have not been commercially developed so far, the official said. Together, these fields have reserves of 200-250 million tonnes of hydrocarbons.

"We are now assessing how these can be developed. We could put up small refineries or power plants near a field to use the crude oil," the senior official, who did not want to be identified, said.

He said the firm was considering setting up joint ventures to develop these fields.

Officials said several small ONGC fields were located in remote areas and their modest reserves did not justify massive investments in infrastructure needed for commercial production.

But high crude prices in the international market have encouraged ONGC to reassess the commercial viability of these fields, particularly after April next year when India's oil and gas sector will be freed of price and distribution controls.

ONGC gets a fixed price of only about $15 per barrel of crude oil although international prices have been about $25 per barrel in recent weeks.

The administered price mechanism denies the state-run firm higher revenues when global prices rise, but after April 2002, the company will get the international price for its crude.

"If global prices remain high, we will have a lot of funds to invest next year. Many of our small and marginal fields will become viable," the official said.

ONGC has also set a target of doubling its reserves to 12 billion tonnes of oil equivalent in 20 years.

The company is also planning to increase oil recovery from its Bombay High offshore field, which accounts for more than two-thirds of ONGC's crude output.

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