Lok Sabha Question No. 1347 (UNSTARRED), answered on 2017-07-24
Subject: Crude Oil Output by ONGC
Ministry: PETROLEUM AND NATURAL GAS
Asked by: SRINIVAS KESINENI

## GOVERNMENT OF INDIA MINISTRY OF PETROLEUM AND NATURAL GAS

## LOK SABHA UNSTARRED QUESTION NO. 1347 TO BE ANSWERED ON 24 th  July, 2017 Crude Oil Production by ONGC

## 1347. SHRI KESINENI NANI:

## Will  the  Minister  of  PETROLEUM  AND  NATURAL  GAS  be  pleased  to state:

a) whether ONGC has reportedly overstated crude oil output and if so, the details thereof and the reasons therefor;

(b) whether some Government agency has objected to the components which were included in the calculation of production performance and  if so, the details thereof along with the response of the Government in this regard;

(c)  the  likely  impact  on  subsidy  bill  for  ONGC  during  the  last  three  years  and  the current year; and

(d)  the  likely  implications  of  these  over  reporting  of  performance  during  the  said period and the steps taken by the Government in the matter?

## ANSWER

## MINISTER  OF  STATE  (I/C)  IN  THE  MINISTRY  OF  PETROLEUM  &  NATURAL GAS (SHRI DHARAMENDRA PRADHAN)

(a) to (d) The Comptroller and Auditor General of India's Report No. 21 of 2016 on 'Crude Oil Production measurement and Reporting System in ONGC' had pointed out  inclusion  of  'condensate'  quantity  as  crude  oil  production  and  thereby  overstating the crude oil production. As per the report, there has been overstatement of crude oil  production on account of above. The report has further stated that there has  been  over  statement  due  to  excess  closing  stock  in  Ankleshwar  and  Assam Assets. The ONGC has submitted that there has been mismatch between reported and measured quantity of crude oil due to inconsistency in measurement procedures adopted  across  the  different  work  centres  of  the  organization.  The  difference between reported crude oil production and the finished crude is inherent due to the process of crude oil production, processing, storage & transportation and is mainly due to the following reasons:-

-  Metering & Measurement discrepancies.
-  Gravity Separation of Basic Sediments & Water (BS&W) and free water from oil during transportation,
-  Release of gas during its processing,
-  Evaporation & Transportation losses.
-  Partial processing / stabilization of crude oil in offshore due to space constraint. This  partially  stabilized  crude  oil  is  transported  through  sub-sea  pipeline  to  on land  terminal.  Crude  oil  is  further  processed  to  make  it  refinery  /  consumer compatible.

Keeping  in  view  the  recommendations of  C&AG the following remedial actions have been taken by ONGC:-

-  Corporate and Asset Specific Standard Operating Procedures (SOPs) for crude oil measurement  and  Reporting have been issued and implemented for standardizing accounting methodology across all Assets. Further, comprehensive guidelines titled 'Adoption of Best Oil & Gas Accounting System in ONGC' have also been issued for implementation.
-  In  onshore,  the  legacy  system  of  production  reporting  which  led  to  mismatch between actual and reported production has been discontinued and reporting is being done through SAP system only.
-  To avoid manual intervention in measurement and reporting of crude oil, meters and inventory  measuring  devices  are  being  connected  to  SAP  system  through SCADA. The SAP - SCADA integration has been completed in offshore and is in progress in onshore assets.

The Comptroller and Auditor General of India (C&AG) in its Report No.21 of 2016 has  reported  that  ONGC  bore  an  additional  subsidy  burden  of  Rs.18626.74  crore during 2011-12 to 2014-15 due to inclusion of condensate and off-gas in production of crude oil. Further over reporting of Production in Ankleshwar and Assam Assets (due  to  excess  closing  stock)  has  also  resulted  in  additional  subsidy  burden  of Rs.160.69 crore.

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## Major reasons for shortfall in crude oil and natural gas production

1.  More than expected natural decline from mature and aging fields.
2.  Delay in completion of development and re-development projects.
3.  Frequent bandhs and blockades in the operational areas of Oil India Ltd.
4.  Lesser offtake of gas from consumers.
5.  Gas production affected due to GAIL pipeline accident near Tatipaka.
6.  Water and sand ingress in the wells.
7.  Contractual issues.

## Initiatives taken by  Government  and Public Sector Oil Companies  for enhancing oil and gas production are as under:-

-  Development of Marginal Fields.
-  Appraisal  of  about  1.5  million  sq.  km  un-appraised  area  of  the  Indian Sedimentary Basins.
-  Re-assessment of Hydrocarbon Resources.
-  Exploration and exploitation of Shale Gas/Shale Oil resources.
-  Implementation  of  Improved  Oil  Recovery  and  Enhanced  Oil  Recovery Schemes.
-  Reviving of old and sick wells.
-  Technology Induction/adoption/absorption and engaging international experts in  the  area  of  drilling,  well  completion,  artificial  lifts,  well  stimulation  etc.  is being done regularly according to the technical requirement of the wells/fields and feasibility.
-  Monetization  of  small  and  marginal  discoveries  in  Onshore  through  service contract and outsourcing
-  Revamping/Replacement/Additional Capacity Projects.