ONGC checks decline in onshore output

Thanks to its efforts at improving efficiency in exploration, government-owned ONGC has broken the declining trend in its oil and gas output from onshore assets that prevailed for the past four years.

The production from onshore assets rose nearly 3% to 1.498 million tonnes in the second quarter of FY17 from 1.454 million tonnes in the first quarter of the fiscal.

At the same time, the second quarter crude oil output from onshore blocks is 102% of the target of 1.465 million tonnes.

The PSU has put on stream about three new areas, including West Deep in Krishna Godavari Onland, Suphyam in Assam and Krishnapalli West in Andhra Pradesh, a senior ONGC official said. The two areas — West Deep in Krishna Godavari Onland and and Krishnapalli West in Andhra Pradesh — are producing about 1,000 barrels of oil per day.

On the other hand, two wells were drilled back-to-back at Suphyam in Assam which yielded positive results. The first well is producing about 40 cubic metre a day, while the test production from the second well is hovering 110 cubic metre a day.

“These (new areas) can be monetised equally. Onshore output is improving quarter-on-quarter. We are likely to achieve the full year target for onshore fields,” a director on the board of ONGC told FE.

In the first two quarters of the current financial year, ONGC has made 9-10 discoveries comprising onshore and offshore areas.

Edelweiss Securities estimates ONGC second quarter net profit at R4,400 crore, up 4% quarter-on-quarter, but down 9% year-on-year.

“While production will largely be flat, realisation will slightly improve quarter-on-quarter. We have assumed higher sales/production ratio for oil (92%) compared to 89% in first quarter of FY17 and 89% in second quarter of FY16,” it said in an October 5 note.

The government-owned explorer drilled 22.368 million tonnes of crude oil in FY16, against 22.264 million tonnes in FY15. Offshore fields, particularly in the western region, performed well and produced 100.3% of the crude production target from such fields in FY16. Offshore oil production has gone up by 2.1% rising from 16.19 mt in FY15 to 16.54 mt in FY16.

However, the gas production scenario continues to be grim with output falling to 21.2 billion cubic metre in FY16 from 22.02 bcm in FY15.

Oil and Natural Gas Corporation Limited (ONGC)