Vol 2, PW 22 (11 Nov 98) Exploration & Production

Indias oil ministry has gone on the offensive in its battle with ONGC to cut production from the Bombay High.

TS Vijayaraghavan, the top bureaucrat in the oil ministry, used a seminar in Bombay last week to announce that ONGC will be cutting production at the Bombay High to preserve the health of the reservoir. Readers of this report will not be surprised by the development.

In our last issue ("STORMY MEETING IN THE MINISTRY") we reported on a terse exchange between Vijayaraghavan and AS Soni Director Operations, ONGC, over the Bombay High, with Soni refusing to cut production. Vijayaraghavans decision to go public clearly illustrates his frustration with ONGC.

He told the Chemtech World Chemcon '98 conference in Bombay that this was the best time to repair and restore the Bombay High oilfield as global crude prices were at a 12-year low. His public pronouncement has clearly left ONGC with no option but to obey.

Vijayaraghavan told delegates that Bombay High's output has run into high gas/oil ratios and its yield has fallen below 26%. He added that a cut in production could last for as long as two years, and this would mean "closing down a few wells".

He confirmed that the UK consultants Gaffney, Cline & Associates have told him the field has the potential to yield oil till 2050. Bombay High was discovered in 1976, and today produces 240,000 b/d - over 40% of ONGC's annual production.

Till April 1998, the field produced 2.4bn barrels of oil and 177bn cubic metres of gas. *Vijayaraghavan told the same conference that India's current oil production comes from only 22% of established oil reserves.

He said that of India's estimated oil reserves of 28bn tonnes, only 6.5bn tonnes had been located. Surveys have not been done in 46% of the land area of India, while in 16% it is poorly done and exploration has just started.

Vijayaraghavan said domestic oil exploration and production should be given the highest priority as 30% of India's foreign exchange is used to pay for petroleum and related imports. He added that crude oil imports at present domestic production levels and expansion in refining capacity would be 115m tonnes by 2006.

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