NEW DELHI: More than half of 37 major public sector oil and gas projects worth over $6 billion, mostly being executed by India's biggest energy firm Oil & Natural Gas Corpand Gail IndiaBSE -1.68 %, have been suffering from inordinate delays, oil ministry officials said after a review.
Oil minister Veerappa Moily, who reviewed state oil companies' investment plans last week, has asked the ministry to identify about 10 high priority projects and monitor them "closely", government and industry officials present in the meeting said.
"I have asked each of the companies to draw up detailed catch-up plans and also have some back-up projects so that the proposed budget outlay is fully utilised. It is necessary keeping in view the immense requirement of oil and gas in the country," Moily said. ONGCBSE -1.26 % chairman Sudhir Vasudeva told Moily that "most of these delays were due to change in scope of the projects where facilities were completed and the phasing of drilling of wells had been altered for a longer period". "E&P (exploration and production) business is highly technical and projects are implemented in phases. Moving from one phase to the next would depend on success achieved in the preceding phase. We have to often go back to the drawing board because of geological challenges," Vasudeva told ET.
Gail chairman BC Tripathi said a steep fall in natural gas output from domestic fields, lack of gas users and fierce local resistance in acquisition of land were main constraints, officials present in the meeting said. "Pipeline projects executed by Gail in Kerala and Tamil Nadu are getting delayed essentially because of the local resistance. In Tamil Nadu stretch, however, we find unprecedented resistance causing huge delay in the project," a Gail spokesman said. The project was scheduled to complete by April this year, he added.
The budget outlays of state oil firms in the 12th Five-Year plan is 4,16,083 crore, which is 182% more than the budget of the previous plan ended in March 2012. "The oil minister also observed some shortfall in fund utilisation by ONGC Videsh (OVL), Oil India and Bharat Petroleum CorporationBSE 0.78 % in the previous plan period," an oil ministry official said.
ONGC Videsh managing director DK Sarraf explained that the "lower utilisation was primarily because there was less acquisition than envisaged although production from overseas fields was higher." OVL is ONGC's foreign arm, which has oil and gas assets in several countries.
Moily has asked OVL to raise its budget outlays to .`90,000 crore in the current Five-Year Plan ending March 2017, which Vasudeva found "achievable". "We are evaluating several oil and gas assets globally," he said. ONGC is considering picking up another 10% stake in Rovuma Area-1 offshore block in Mozambique. Last month it had signed a $2.475-billion deal with Videocon for a 10% stake in the field.
The cabinet committee on investment (CCI), which is closely monitoring public sector companies' investments in projects, has created a specially cell to expedite regulatory approvals, officials said.