ONGC Current Affairs

ONGC to introduce Asia’s first large scale CO2 injection technique at Gandhar field

State owned Oil and Natural Gas Corporation (ONGC) is planning to introduce carbon dioxide (CO2) injection technology in its Gandhar oil field in Gujarat. It will be first large scale CO2-injected project in Asia.

Its purpose is to recover extra 20 million barrels of crude oil under enhanced oil recovery (EOR) programme. EOR programme aims at recovering up to 20% of residual oil from ageing oil fields to improve India’s energy security.

Key Facts

Gandhar located in Gujarat is one of ONGC’s major brownfields and was discovered in 1983. The field produces approximately 30,000 barrels of oil per day and is on the decline.

Under this project, ONGC plans to invest $75 million in CO2 capture and another $200 million in injector producer network to recover an extra 15% of residual oil currently valued at $1.36 billion. It will be operational in 20 months. ONGC is in talks with National Thermal Power Corporation (NTPC) for utilising nearly 5 million tonnes of emitted gas (CO2) from the latter’s Gandhar plant.

CO2 injection technology

CO2 injection technology is a proven concept in the West specially the US and Canada. Under it, CO2 gas is injected with residual oil in the ageing field in which total oil production has been declining. It reduces its viscosity and makes it easier to displace oil from the rock pores. CO2 gas also swells oil, thereby pushing it towards the producing well for extraction.

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ONGC to acquire Government’s entire 51.11% stake in HPCL

The Union Government and state-run oil explorer ONGC clinched deal for acquisition of government’s 51.11% stake in Hindustan Petroleum Corporation (HPCL) for a consideration of Rs. 36,915 crore. The deal will be closed by end of January 2018. Earlier empowered panel headed by finance minister Arun Jaitley had approved price bid for acquisition. The all-cash deal will help government boost its non-debt capital receipts and meet disinvestment target (Rs 72,500 crore).

Significance

Through this acquisition, ONGC is gaining midstream and downstream presence and access to marketing network. This acquisition will make ONGC India’s first vertically integrated oil major, having presence across value chain in sector. The integrated entity will have advantage of having enhanced capacity to bear higher risks, take higher investment decisions and neutralising impact of volatility of global crude prices. As for HPCL, deal will help it in further leveraging synergy at various levels of vertical value chains as part of integrated oil and gas group. It also will enable ONGC to mitigate risk of crude price volatility.

Background

In 2017-18 Union Budget, Finance Minister Arun Jaitley had announced that state-run oil companies will be merged to create ‘oil major’. Following this Cabinet Committee on Economic Affairs (CCAE) in July 2017 had granted ‘in-principle’ approval to the strategic sale of HPCL to ONGC. This also included change in management control, but allowed HPCL to retain its brand as subsidiary of the national oil explorer.

Market Share

During 2016-17, HPCL had turnover of Rs 2,13,489 crore and profit after tax of Rs 6,502 crore. It markets around 35.2 million tonne of petroleum products accounting for market share of about 21%and has around 15,000 fuel retail outlets. ONGC contributes around 70% of Indian domestic production of crude oil and natural gas.

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