OVL production affected by OPEC+ cut, situation in Venezuela: ONGC President

OVL is the overseas arm of ONGC and is investing in oil and gas assets as part of India’s energy security strategy. It faced a reversal in its $2.1 billion acquisition of Siberian Deposits of Imperial Energy Corp. plc. In addition, it awaits overdue dividends from the San Cristóbal oil exploration project in Venezuela and is fighting arbitration with the Sudanese government to recover about $400 million in unpaid oil arrears.

“The production from overseas assets was 13.039 MMTOE (Million Metric Tonne Oil Equivalent) during FY21. oil production was 8.510 million tons; 12.8% less than the production in FY20, and gas production was 4.53 BCM (billion cubic metres), which is 13.3% less than in FY10,” Kumar said in his speech. .

“The low production is mainly because projects in Russia, the United Arab Emirates and Azerbaijan have been affected by compliance with the production cuts agreed by the host governments of the OPEC+ group of countries. The geopolitical situation affected two projects in Venezuela, namely Sancristobal and Carabobo-1,” he said.

With India’s low domestic energy production, energy security is an important focus area for the National Democratic Alliance (NDA) government, as expressed by Prime Minister Narendra Modi in his Independence Day speech on 15 August.

ONGC’s standalone production during the year was 42.4 MMT of oil and oil equivalent gas.

“Crude oil production including joint venture production was 22.5 million tonnes,” Kumar said and added, “natural gas production including joint venture production was 22.816 BCM.”

India’s domestic oil production continued to falter in August with crude oil production declining by 2.29% compared to the same period last year. However, according to the monthly production report released by the Ministry of Petroleum and Natural Gas, gas production grew by 20.23 per cent in August.

“In the wake of the outbreak of Covid-19, global oil demand fell to record levels. However most of the loss has already been covered – from a low of 78.5 million barrels of oil per day (BOPD) in April 2020 to 94.7 million barrels in April 2021. It is expected to surpass pre-pandemic levels in 2022, as per IEA,” Kumar said.

This comes in the backdrop of India’s spending ₹12 trillion annually to meet energy needs. India is particularly vulnerable because any increase in global prices could affect its import bill, drive up inflation and widen its trade deficit. India spent $101.4 billion on crude oil imports in 2019-20 and $111.9 billion in 2018-19. It is a major refining hub in Asia with an installed capacity of over 249.36 million tonnes per annum (MTPA) through 23 refineries.

“The impact of the pandemic on oil prices was also very sharp and sharp. Worst case scenario, Brent crude fell below $20/bbl, while WTI traded in the negative, for the first time ever. Prices have now recovered due to rising demand and coordinated production cuts by the OPEC+ group (led by Saudi Arabia and Russia),” Kumar said.