Policy
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Crude Price Fall: Govt. Grabs Windfall, Consumers Left High And Dry
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As LNG Prices Fall, Long Term Deals Turn A Fiasco For Importers
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Initial Enthusiasm Of Electric Vehicle Initiative Loses Momentum
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Regulation
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ONGC Begins Gas Production From Deep Water KG Block
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Alternative Energy / Fuel
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New Projects
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NRL To Set Up Crude Oil Terminal In Paradip
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Market Watch
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Oil India Signs Crude Sales Agreement With Numaligarh Refinery
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Companies
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Alphageo Bags Order From Oil India
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Welspun Corp Bags Offshore Pipes Supply Contract In Australia
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Press Release [FREE Access]
Petro Intelligence » Bombay High’s Tale Of Woe: Short Shrift For Local Talent

by R. Sasankan

Captain Satish SharmaThe Ministry of Petroleum and Natural Gas (MoPNG) and the managements of the companies under its administrative control are straining their sinews to increase domestic crude and gas production to meet Prime Minister Narendra Modi’s target for at least a 10 per cent reduction in oil imports by 2022. In normal circumstances, such a reduction in imports should be difficult in a country where the demand for petroleum energy is surging. However, such a target is possible if there are fresh commercial discoveries of oil and gas. Unfortunately, there has not been a major commercial discovery after Bombay High in the 1960s and South Bassein in the 1970s.

The MoPNG under Dharmendra Pradhan has proposed to offer private players, Indian or foreign, up to a 60 per cent participatory interest in some of the producing fields in the nomination blocks. It is a subject of speculation whether fields on offer have sufficient balance recoverable reserves to meet the Prime Minister’s target. The only field which can make a difference in domestic crude production is Bombay High which has been in production for more than 40 years. On present reckoning, Bombay High is not on offer. Even if offered, it is unlikely that there will be anyone who can make a significant difference.

Col. S.P. WahiDuring my long reporting experience of India’s petroleum sector, I discovered that India’s political leadership has not been enthusiastic about increasing domestic crude production unless it is accompanied by huge outlays. About 16 years ago, when Capt. Satish Sharma was the country’s petroleum minister, I introduced an ONGC executive to him who came up with a proposal to double Bombay High’s production at a negligible additional cost.

The gentleman was none other than K. Damodaran, a legendary production expert. The Bombay High reservoir had already been damaged because of wrong production practices that had been adopted during the Accelerated Production Plan (APP) in the 1980s when Col S.P. Wahi was the chairman and Lovraj Kumar, the petroleum secretary. The country was facing an acute balance of payment crisis forcing the government headed by Mrs Indira Gandhi to negotiate a loan from the International Monetary Fund (IMF). Import of crude and petroleum products constituted the single largest outgo of foreign exchange.

LovrajkumarBombay High, a shallow water field, has a very sensitive reservoir. The rate of production should be in tune with its behaviour. As it was not politically feasible to lower production during those crucial years, ONGC tried to maximise production which damaged the reservoir, leading to a high gas-oil ratio.

The life of an oil field is normally 15 years. By the time Damodaran made his offer, the field had already been in operation for over 26 years. Still, the field was left with more than 50 per cent of the originally estimated reserves. Damodaran’s offer was incredible but no one doubted his ability to crank up production to the desired levels. When production in the country’s first commercial field at Ankaleshwar dropped in the 1970s, the then petroleum minister K.D. Malaviya announced in parliament that a natural decline had set in at Ankaleshwar field. ONGC’s then chairman deputed Damodaran to Ankaleshwar who restored production to the peak level for another seven years. At that time, the ONGC management had honoured him by naming a Gas Lift after him.

K. DamodaranNeither Capt. Satish Sharma nor the then ONGC chairman was interested in Damodaran’s proposal. A deeply frustrated Damodaran sought premature retirement from ONGC. I once casually mentioned this to Dr Vijay Kelkar who felt that ONGC needed western technology for its development. Damodaran’s technology was based on common sense. Geologist Kottilil Narayanan tried to find out the secret of Damodaran’s plan but failed, which strained their relations for ever. (I had recorded this in one of my columns).

The increasing gas-oil ratio continues to play havoc with Bombay High. The field, which achieved a peak production of 20 million tonnes per annum, has been declining steadily. Since Damodaran’s offer, ONGC has hired the services of international consultants twice at a total cost of Rs 300 billion. They drilled innumerable in-fill wells which failed to increase production but slowed down the decline.

In E&P industry, production is a highly specialised area. But ONGC did not choose a production expert to head the production division for the first 40 years of its existence. When Accelerated Production Plan for Bombay High was executed, the Member in charge of production was A.K. Malhotra, a structural engineer with no experience in production. S.K. Manglik was the first production specialist to head the division in the 1990s and by that time Bombay High reservoir had already been damaged.

It was not clear to me why the political leadership rejected Damodaran’s brilliant proposal. The politicians were not the only ones who were cool to his plan; several senior executives at ONGC and top bureaucrats also displayed very little enthusiasm.

I had known Damodaran during the time that I was reporting on the petroleum sector and I had found him to be a genius. My conviction was shared by many within ONGC. Still, the proposal did not go through. Why? When I dug around a little, I discovered a nugget of truth: small is not beautiful in India’s petroleum sector. Damodaran’s mistake was that he had offered to achieve his goal at a negligible cost. The big attraction for the political boss, bureaucrats and top executives at ONGC lies in the size of the cost and the funding mechanism. There is another failing: a contract is awarded straight away if it comes from a well-known Indian or foreign company.

There are a host of talented individuals in the country and within oil companies. They rarely get any encouragement. ONGC has quite a few institutes that specialise in all areas of exploration and production (E&P). But the top management and the political leadership invariably prefer to bring in foreign companies and consultants instead of promoting these institutions by giving them major assignments. These institutes of ONGC have been in operation for more than half a century. They exist but do not make any great contribution. Sadly, they are not expected do so either.

 



To download the latest issue 'Volume 26 Issue 24 - March 25, 2020', click here
Petro Intelligence [FREE Access]
Putin Plays An Ace To Ruff Trump’s Hand
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Urals Gambit: Putin’s Strategy To Conquer Indian Market
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Time To Repudiate The Crooked Rasgas Deal
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Bombay High’s Tale Of Woe: Short Shrift For Local Talent
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Foreign Investment
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Overseas Investment
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Air Products To Provide LNG Technology For Mozambique Onshore Project
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Gas Scene
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Natural Gas Price Trends: Global and Domestic
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Sector-Wise Consumption of Natural Gas In January 2020
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Domestic Natural Gas Scene in January 2020
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Natural Gas Price: Global & Domestic (December 2019)
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LNG Import, Gas Production and Consumption Since 2007-08
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Gas - Import Dependency
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Sector-wise consumption Of Natural Gas Since FY 2016-17
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LNG is more competitive for transportation distances beyond 1,000km (offshore) and 3,000km (onshore)
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China’s Dependency On Imported Gas Trending Up As Production Lags Behind
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Natural Gas price trends: Global & Domestic
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CNPC’s shale gas target looks overly ambitious
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LNG Has Relatively High Emission Intensity In Some Cases
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Global and Domestic Natural Gas Price Trends
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Asia’s (excluding China) gas production remained flat from 2010
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Evolution of natural gas consumption in India
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Power deficit: Region-wise position for February 2020
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Types of Crude Oil Processed by Indian Refineries during April 2019-February 2020
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LPG, Pet coke Continue To Dominate Petroleum Products Import In February
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Region wise percentage share(%) of crude oil during April 2019 -February 2020
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Domestic Oil & Gas Production Vis-Ŕ-Vis Overseas Production
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Update: Gross Refining Margins (GRM) of refineries
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Update: Coal Bed Methane (CBM) gas development
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Total subsidy/under-recovery on petroleum products & natural gas
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Operating And Under-Construction Nuclear Power Plants In India
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Indian Drilling Rig Count In January 2020
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BPCL’s E&P assets overseas and within the country
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Prices in Indian Basket of Crude In February 2020
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Role of coal in energy supply and power generation in 1971-2017
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Realignment of India’s Crude Oil Imports
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Auto Sector Continues With Dismal Performance In January 2020
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Domestic LPG Scene As On January 1, 2020
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Update: Production Vis A Vis Consumption Of Petroleum Products
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Update: Consumption Growth of Petroleum Products for the last ten years
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Power Deficit: Region-Wise Position For January 2020 (% Deficit)
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High Sulphur (HS) & Low Sulphur (LS) crude oil processing
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Tenders [FREE Access]
Petronet LNG
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ONGC
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ONGC
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