Oil flow rising from India's privatized fields amid flagging output

Indian crude oil production [37,115 bytes]

Newly privatized oil fields in India are increasing their contribution to the nation's oil production, while state oil-operated output is flat or declining, according to the latest final data.

Oil production from areas operated by Oil & Natural Gas Corp. (ONGC) declined to 28.25 million metric tons in fiscal year 1997-98 from a high of 31.61 million tons in fiscal 1995-96, while output from fields operated by Oil India Ltd. (OIL) has remained relatively constant at 3 million tons/year.

At the same time, production from private joint ventures operating in India has jumped to 2 million tons in fiscal 1997-98 from only 0.26 million tons in 1994-95. The same trend has continued in the first three quarters of the latest full fiscal year, which ended in March 1999.

Dragging its heels?

Despite this trend of rapidly rising output from privatized fields, private industry officials contend that the government has been dragging its heels since 1996 over signing production-sharing contracts (PSCs) for a clutch of small and medium-sized oil fields.

The biggest among these is Ratna oil field, the rights to which were acquired nearly 3 years ago by a consortium of India's Essar Oil Ltd. and Premier Oil plc, London. The oil field had been put on the block in 1995, and a letter of intent issued in 1996.

In October 1997, a group of ministers, including the then-finance minister, P. Chidambaram; petroleum minister, Janeshwar Mishra; and Planning Commission deputy chairman, Madhu Dandavate, had cleared the award of Ratna and 11 other small oil fields.

Shortly thereafter, the United Front government fell; and the BJP government, which took over in May 1998, had been too preoccupied with surviving (it collapsed last week) to bother about what to do with the PSCs. "The Ratna matter has been pending with the government for 3 years, and we have not heard anything from them," said Prashant Ruia, director of Essar Oil. "It's quite frustrating."

Privatized fields' growth

Because of the delay, the government apparently has missed a chance to help stem India's oil production decline with growing output from privatized fields.

Output from the Ravva fields, operated by a group consisting of India's Videocon and Cairn Energy plc, has risen to a current 47,000 b/d from 3,000 b/d, when the fields were operated by ONGC.

Similarly, output from Mukta-Panna field, operated by a combine of Enron Corp. and India's Reliance Industries Ltd., has jumped to 27,000 b/d at yearend 1998 from 8,000 b/d under ONGC.

There has also been a substantial rise in output from Tapti oil field, also operated by the Enron-Reliance consortium.