ONGC vows to cut costs to get through crisis

Vol 19, PW 10 (28 Jan 16) Exploration & Production
     

Halliburton and Schlumberger have already been hit by ONGC’s cost-cutting drive as oil prices fall below the cost of production.

Other contractors better prepare themselves for more of the same. PETROWATCH learns ONGC’s Board led by chairman DK Sarraf resolved to drastically cut costs at a meeting in Hazira over January 19-20 to review the performance of all the company’s assets.

"Normally we hold performance review meetings in our offices," says ONGC director offshore TK Sengupta. "But this time we decided to step out of our comfort zone and go into the field to survey the situation.

Hazira (landfall for 33m cm/d from the Bassein gasfield) is one of our largest facilities. We thought it was an ideal location.

" He adds that all the assets were linked through video conferencing and that the Board resolved to induct technology to sustain production while controlling costs. Another ONGC source adds the Board also told all assets to reduce inventory and issue tenders for procurement only if necessary.

A Schlumberger source adds ONGC is forcing it to reduce rates on running contracts. “They’re unrealistic,” he says.

“On some contracts ONGC is asking for a 50% reduction.” Halliburton is facing a similar situation.

“I don't know how much of a reduction ONGC has asked for," says a Halliburton source. "But we’ve been told to reduce rates if we want our contracts to continue.

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