Lok Sabha Question No. 4082 (UNSTARRED), answered on 2017-03-27
Subject: Crude Oil Production 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. 4082 TO BE ANSWERED ON 27 th  March, 2017

## Crude Oil Production by ONGC

4082. SHRI KESINENI NANI:

पैट्रोलियम व प्राक ृ लिक गैस मंत्री

## 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

## पेट्रोलियम और प्राक ृ लिक गैस मंत्रािय में राज्य मंत्री ( स्विन्त्त्र प्रभार ) ( श्री धमेन्त्र प्रधान )

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

(a)  &  (b). 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 over-stating the crude  oil  production.  There  has  also  been  overstatement  of  crude  oil  production  to some  extent  by  ONGC,  particularly  in  Ankleshwar  Asset.  The  mismatch  between reported  and  measured  quantity  of  crude  oil  occurred  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  has  been  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.

(c). 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.  Further  over  reporting  of  Production  in  Ankleshwar  and Assam  Assets  (inflating  closing  stock)  has  resulted  in  additional  subsidy  burden  of Rs.160.69 crore.

(d). As  per  the  Comptroller  and  Auditor  General  of  India  (C&AG)  Report  No.21  of 2016  over  reporting  of  crude  oil  production    helped  ONGC  to  meet  its  production targets from 2010-11 to 2014-15, which resulted in excess pay-outs of Rs.106.51 crore on account of Performance Related Pay of employees.

ONGC  has  taken  necessary  steps  for  improvement  in  the  crude  oil  production measurement and reporting system.

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