ONGC Current Affairs

CCEA approves survey project of Un-appraised Areas of Sedimentary Basins

The Cabinet Committee on Economic Affairs (CCEA) has approved survey project to acquire 48,243 Line Kilometer (LKM) 2D seismic data for appraisal of Indian sedimentary basins where limited data is available.

Sedimentary basin is a low area in the Earth’s crust, of tectonic origin, in which sediments accumulate. It can range from as small as hundreds of meters to large parts of ocean basins.

India has total 26 sedimentary basins covering area of 3.14 Million Sq Km (MSK) spread over onland, shallow water and deep water. 48% of total sedimentary basin area (about 1.502 MSK) does not have adequate geo-scientific data.

Key Facts

The project will be implemented by Oil India Limited (OIL) and Oil and Natural Gas Corporation (ONGC). Under it, survey work will be carried out in 24 States. OIL will conduct survey in North-Eastern States, while ONGC will cover remaining area. The entire project is likely to be completed by 2019-20.

After appraisal of these sedimentary basins, blocks will be offered for further exploration and production activities based on prospectivity of area. It will help in increasing the investments in domestic production of oil and gas and generate direct and indirect employment.

Significance

The appraisal of all unappraised areas is considered an important task to launch future Exploration and Production (E&P) activities. Data acquisition will provide initial insight into basins and help in planning future E&P activities. It will be useful in deciding focus areas of exploration activities in country and on basis of this primary data, E&P companies will be able take up further exploration activities in acreages allocated to them.

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CCEA approves selling 51% stake in HPCL to ONGC

 The Cabinet Committee on Economic Affairs (CCEA) has approved sale of government’s 51.11% stake along with management control in HPCL (Hindustan Petroleum) to ONGC. HPCL will continue as PSU after the acquisition.

HPCL will add 23.8 million tonnes of annual oil refining capacity to ONGC’s portfolio, making it the third-largest refiner in the country after Indian Oil Corporation (IOC) and Reliance Industries.

Prior to the merger, HPCL will take over Mangalore Refinery and Petrochemicals Ltd (MRPL) to bring all the refining assets of ONGC under one unit. ONGC currently owns 71.63% of MRPL while HPCL has 16.96% stake in it. MRPL will be the third refinery of HPCL, which already has units at Mumbai and Visakhapatnam

Background

There are only six major PSUs in the oil sector, ONGC and Oil India Ltd being the oil producers, IOC, HPCL and BPCL are in refinery business and GAIL is in midstream gas transportation business. The rest, such as ONGC Videsh, Numaligarh Refinery Ltd, Chennai Petroleum Corp (CPCL) and MRPL are subsidiaries of one of these six PSUs.

Union Finance Minister Arun Jaitley in his 2017-18 Budget had talked about creating an integrated oil behemoth. After that oil companies were asked to give their options. ONGC had evaluated options of acquiring either HPCL or BPCL, the two downstream oil refining and fuel marketing companies. It had found that acquisition of BPCL, country’s second-biggest fuel retailer is too expensive. On the other hand, HPCL’s acquisition easier as its market cap is of Rs 58,485.55 crore and buying government’s entire 51.11% stake would entail an outgo of Rs 29,900 crore.

Comment

Acquisition of HPCL by ONGC will help the government meet 40% of its disinvestment target of raising Rs 72,500 crore in the current fiscal. More deals in the oil sector including Indian Oil Corporation (IOC) buying out explorer Oil India Ltd or Bharat Petroleum Corp Ltd (BPCL) merges with GAIL may be in the offing.

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