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Alternative Energy / Fuel
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Companies
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Saudi Aramco Sign Feedstock And Marketing MoU With ONGC
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NTPC Ties Up With IndianOil For Renewable Energy
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Press Release [FREE Access]
Petro Intelligence » Fighting The Rot Within

By R. Sasankan

India's upstream petroleum sector has been dogged by a plethora of problems for several decades. The situation has steadily worsened because the remedies that have been suggested have only aggravated the ailment.

That old rigmarole is starting to play out again with the so-called pundits in the petroleum ministry tossing another half-witted solution to deal with the pressing need to crank up output from the country's fast-depleting hydrocarbon basins. The policy strategists have veered round to the view that the onerous objective can be achieved by either auctioning producing oil fields to foreign oil companies or persuading them to sign on as joint venture partners with state-owned oil companies.

In my previous article in the same column, I had highlighted how ONGC and Oil India were forced to drill dry holes when exploration acreages that attracted no bids were foisted on the hapless PSUs. If there were no takers for the blocks offered, the government should have been honest enough admit it. Instead, these PSUs were forced to bid for them just so that the ministry could claim that these bidding rounds had been a resounding success. There were nine such rounds under the New Exploration Licensing Policy (NELP).

I wish to amplify on this basic theme by focusing on how ONGC was turned into a cat's paw as part of a larger game of political shenanigans where a bunch of wrong people were elevated to levels of incompetence that destroyed the work culture within the organisation itself.

The Oil and Natural Gas Commission (ONGC) was created on August 14,1956. During the initial decades up to the end of 1970s, it ranked among the world's best national oil companies. The Commission was fortunate enough to have a committed leadership within that was guided by sagacious political masters. The first signs of trouble surfaced in the early 1980s. The Public Enterprises Selection Board (PESB), the government agency tasked with the responsibility of picking the right people for senior appointments in the public sector companies, wreaked havoc by choosing the wrong people for sensitive posts within ONGC.

Upstream companies such as ONGC and Oil India have posts of directors who must have specialisation in the concerned areas. The PESB must not ignore this vital yardstick while selecting candidates even in the face of extreme political pressure.

During the interviews conducted by the PESB, the ministry is represented by the secretary who is free to express his views but the board is not bound to go by his opinion if the candidate lacks the professional qualifications for the job. True, the PESB recommendations can be rejected -- and often are -- by the administrative ministry. But it can become hugely embarrassing for the ministry to foist a candidate that the Board deemed unsuitable for the position. The PESB often succumbed to political interference and there were hardly any clashes between the Board and the ministry over the selection of senior executives for ONGC and Oil India.

Oil production is a highly specialised area and the director in charge should be an expert on every aspect of production including reservoir behaviour. This is one area where the PESB consistently bungled. During the years when ONGC was a Commission, the member (offshore) was put in charge of production. There were some bad choices for this sensitive post. When ONGC embarked on accelerated production in Bombay High in the early 1980s, the member (offshore) happened to be a structural engineer and not a production expert. In a scramble to boost output, the rate of production was jacked up to a level that was far higher than permissible levels for the reservoir. The member concerned wasn't competent enough to calibrate output to desirable levels. This resulted in a disaster on an epic scale: the reservoir was badly damaged and production ran into a thicket of problems. ONGC had to drill close to 1000 in-fill wells in place of the normal requirement of 200-250. It also had to pay a consultancy fee of Rs 300 billion to foreign companies to keep the Bombay High production going.

Some of the characters who messed up Bombay High production later found their way to RIL’s KG-D6 project where they committed the same blunder when the D1,D3 fields were cranked up to attain a peak production of 80 mmscmd. Production collapsed and the rest is history. This column had cautioned Mukesh Ambani well in advance about the role that these people had in Bombay High but sadly no one listened.

Neither the petroleum ministry nor the PESB appears to have learnt any lesson from the colossal tragedy at Bombay High. In the ensuing selection of member (offshore), the PESB recommended a driller to the post. A driller has nothing to do with production but the PESB, obviously influenced by the ministry's representative on the interview board, recommended a driller who did not have a single day’s experience in production. Later, when the media highlighted this lapse, new chairman S.L. Khosla shifted him out of production and appointed S.K. Manglik, the first production expert, to be put in charge of production in ONGC. This was around 1990.

My basic contention has been that ONGC is more sinned against than sinning. I do not want to bore my readers by putting forth a laundry list of botch-ups but it would be fair to mention some of the most atrocious lapses. One of the worst instances was the selection of director (finance) at ONGC. By that time, ONGC had ceased to be a Commission and morphed into a corporation. There is a general procedure that is followed when making senior appointments. After the PESB forwards its shortlist of selected candidates, it must be vetted by the Appointments Committee of the Cabinet (ACC).

In this case, a diabolical plan was hatched to scuttle the chances of the person who had been placed at the top of the list. Even as the ACC was processing the recommended names, the Central Bureau of Investigation -- the enforcement agency -- raided the residence and office of the candidate who had topped the list of three names recommended for the post of finance director. Buta Singh happened to be the home minister at that time.

News filtered out that a number of incriminating documents had been seized from this person's residence. Someone in the government wanted to ensure that the most favoured candidate, who had a reputation for being honest and competent, should be kept out of the reckoning. The CBI sat over the case for a period of three months and, in the meanwhile, the ACC cleared the name of the second man on the list. Two weeks after the announcement was made, the hapless candidate was cleared of all charges. He left ONGC and took up a job with a private firm in Bombay.

This really begs the question: Who is responsible for landing ONGC in its current mess? The organisation has a number of honest and competent professionals who can match the best in the world but they seldom get the opportunity to shine. If corrupt people are picked to head key departments, they prefer to have sycophants working under them. This weakens the structure of the organisation and perpetuates a system where grease acts as a lubricant in the form of kickbacks.

My readers may be surprised to learn that a few years ago, the ONGC’s officers association picked up the ‘courage’ to expose this culture of corruption within the entity. It issued a press release alleging that the then CMD had ensured that kickbacks from large contracts were transferred to the foreign accounts of some top bureaucrats including the cabinet secretary, special secretary to Prime Minister and the head of the vigilance commission. It sounds Incredible. The press release, genuine or fabricated, circulated for just three hours before it was seized and killed.

And the Association, known for its militancy, was immediately castrated after which its existence has been a subject of speculation.



To download the latest issue 'Volume 28 Issue 16 - November 25, 2021', click here
Petro Intelligence [FREE Access]
BPCL Selloff Fans Adani’s Ambitions
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How India’s Oil Exploration Was “Rigged”
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Fighting The Rot Within
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Hardeep Puri Needs To Put The House In Order
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Foreign Investment
Trafigura To Exit Nayara Energy
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Cairn To Partner With Halliburton For Shale Exploration
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Cairn Announces Partnership With Baker Hughes
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Overseas Investment
Trinity Lubes Opens First Plant In Sharjah
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Gas Scene
Sector-Wise Consumption of Natural Gas In October 2021
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Domestic Natural Gas Scene In October 2021
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Sector-Wise Consumption Of Natural Gas
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Expanding Natural Gas Infrastructure
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Domestic Natural Gas Scene in September 2021
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Natural Gas Price Trends: Global And Domestic
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Dip In Capacity Utilisation of LNG Terminals
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Sector-Wise Consumption Of Natural Gas
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Domestic Natural Gas Scene in August 2021
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Sector-wise Consumption Of Natural Gas in July 2021
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Domestic Natural Gas Scene In July 2021
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Natural Gas Price Trends: Global And Domestic
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Sector-Wise, Month-Wise Demand & Consumption of Natural Gas
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Growth In Import Dependency Of Natural Gas Halted
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Sector-wise Consumption Of R-LNG, Domestic Gas Since FY 2018-19
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Natural Gas: India’s Increasing Import Dependency
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CGD Becomes An Attractive Business In India
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Petroleum Products Import Up 28%, Exports Up 37.9% In October
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Growth, Degrowth In Sales of Passenger Vehicles, Two Wheelers
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Industry Consumption Trend Analysis April - October 2021
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Crude Oil Impot Up In October, OPEC Share Down
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Share Of Domestic Crude Down In Total Processing, HS Crude Share Up In October
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Consumption Of Petroleum Products Up 0.8 % In October 2021
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Power supplied and deficit for October 2021
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Plant Fuel & Loss
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Production vis a vis Consumption Of Petroleum Products
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Total Distillates Production In Crude Processing Of All Refineries in India
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Oil Import - Volume And Value
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Specific Energy Consumption Of PSU Refineries
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Oil Demand in 2022 To Average 100.8mb/d, says OPEC Report
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Distillate Yield Of PSU Refineries
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Price movements in Indian Basket in October 2021
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Petroleum Products Consumption Trend Analysis 2021-22
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Power supplied and deficit for September 2021
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Import, Export Of Petroleum Products Increase in September 2021
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4% Decline In Crude Oil Import From OPEC, Total Import Up By 16%
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Analysis of crude oil processed by refineries in September
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Self-Sufficiency In Petroleum Products
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Sales Of Passenger Cars, Utility Vehicles,Two Wheelers Register De-growth In September
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Product-Wise petroleum products consumption in September 2021
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Tenders [FREE Access]
ONGC
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ONGC
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