Defending its business strategy, the state-run explorer, Oil and Natural Gas Corporation Ltd (ONGC) today said any “potential” restructuring of the company would not significantly affect the company.
A Press Trust of India report had on April 25, reported that the petroleum ministry has told ONGC to restructure the business and sell stake in producing oil fields to private firms, get foreign partners in the Krishna Godavari basin gas fields, monetize existing infrastructure, and hive off drilling and other services into a separate firm to raise production.
The company said it is looking into strategic relationships and close alliances with key international players through its overseas upstream arm ONGC Videsh and intends to invite foreign participants to explore Category-II and Category-III basins which match the size and scale of expectations and portfolio of these large players.
Indian sedimentary basin is divided into three categories -Category-I includes producing basins; Category-II is less prospective though contains resources to be developed and produced; Category-III is with only prospective resources to be explored and discovered.
“So, it can be stated that the ongoing discussions are neither new nor intended to limit the role or growth of ONGC. Requirement and opportunity for ONGC is to play an even more pronounced role in improving the energy security of the country. ONGC feels confident and comfortable that the ongoing discussions within ONGC and with its stakeholders will help deliver greater value to all stakeholders,” ONGC said in a statement.
The company added that during the ongoing discussions there has been an opportunity to raise issues that are critical for ONGC to achieve the objectives of delivering value to all stakeholders.
Citing the example of goods and service tax (GST) and natural gas prices, the company said, despite the uneconomical gas prices, it has been aggressively pursuing its deep-water projects in the East Coast and a couple of shallow water projects in the West Coast.
Oil and natural gas are out of the GST regime. Operators have to pay state value-added taxes with no set-offs.
“There are certain issues around structure where decisive steps can be evaluated only once the industry is completely under GST regime,” the company said, adding that the company has been holding regular interactions with various stakeholders including the Ministry of Petroleum and Natural Gas (MoPNG), in order to further augment the role of ONGC in the domestic upstream sector.
As part of this strategy, ONGC Board had approved Energy Strategy 2040 in April 2019 outlining strategic growth initiatives across the energy value chain. ONGC also plans to acquire much larger acreage through open acreage licensing policy.
