Guwahati, 23rd September 2008

The lengthy tendering process and bureaucratic bottlenecks have severely crippled the deep water exploration of ONGC robbing them off the competition, said the CMD R S Sharma. Addressing a press conference he said that statutory tendering process had become so lengthy for the ONGC that either the price went up by two three times or the company move to other sectors leaving ONGC in lurch.With Reliance marching ahead, the ONGC is saddled with procedural hassles which continue to delay its oil and gas production plans.

CVC procedures and guidelines that ONGC has to adhere to, which is restricting it to hire rigs, gas production from its eastern offshore block in the Krishna Godavari basin may not begin before 2013. Earlier, the production was envisaged to start in 2011. “The CVC procedures and guidelines restricted ONGC to go ahead and hire a rig for its east coast operations. After detailed negotiations, the rig was available for ONGC at $ 550,000 a day. However, we were not allowed to go ahead and hire the rig, which was hired by another company for $600,000 a day. So we lost out on account of our procedures. We are in a dilemma. How are we then expected to compare with our private sector counterparts, who do not face any such restrictions,” ONGC’s chairman and managing director, R S Sharma said.

“Non availability of deepwater and ultra deepwater rigs in the global market has been a serious impediment in our deepwater campaign as Earlier, the production was envisaged to start in 2011″ admitted Mr. Sharma adding that ONGC was envisaging an investment of over five billion USD to start production from deepwater blocks of Krishna Godvarias added that the lead time to build new ones is three years

A total number of 11 discoveries have been made in the Block, apart from two discoveries G-4 and GS-29 to the north and two discoveries S-1 and Vashista to the west of the block in nomination PEL blocks. The development programs and the commercialize thereof would be submitted once the appraisal program are complete. The time line for the appraisal program for the northern discoveries is July 2010 while it would be December 2009 for the southern ultra-deep discovery.

ONGC is investing close to $5.5 billion in developing gas finds in eastern offshore Krishna Godavari basin blocks—KG-DWN-98/2 and KG-OS-DW4. The estimated gas reserves in these blocks is 6.7 trillion cubic feet of gas. Mr Sharma said the non-availability of rigs especially the deep water and ultra deep water ones was a major problem being faced by all oil and gas developers across the globe. The rig prices have seen an unprecedented jump from $192,000 barrels a day in 2003 to anywhere above $600,000 a day presently. No deep-sea drilling rig was available anywhere in the world for hire before 2010 and the lead time to building new ones is three years. “ONGC needs to be given a special dispensation to avert delays in our oil and gas production plans,” Sharma said.