ONGC manages to halve exploration cost write-offs

NEW DELHI: State-run Oil and Natural Gas Corp (ONGC) is trying hard, and succeeding, in lowering its exploration cost write-offs, one of the biggest concerns for all oil firms. The write-off has nearly halved in a year and is expected to shrink further.

Explorers spend millions of dollars gathering seismic data and drilling wells to discover areas that can commercially produce oil and gas. They have to write off expenses when the wells drilled in the process turn out to be dry, or with reserves that can't be exploited commercially.

In 2015-16, ONGC's exploration cost write-off was Rs 5,700 crore, sharply lower from Rs 10,870 crore in 2014-15, Rs 7,843 crore in 2013-14, and Rs 10,088 crore in 2012-13.

"My worry was how we can carry on with this kind of write-off," said Ajay Kumar Dwivedi, who has recently completed a year as Director (Exploration) at ONGC, highlighting that the exploration writeoff in some past years came close to the company's entire exploration budget. But with a conscious effort, led by the top leadership and involving all relevant departments, the write-off has now started falling substantially.

"This year I am sure it will further come down because the entire board has joined hands in making this happen. The number of wells drilled will increase and writeoff will come down," he said. There is "more focus on analysis, data, and on challenging each other" on the interpretation of data that has helped ONGC face fewer dry wells, this time, he said.

Oil and Natural Gas Corporation Limited (ONGC)