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Business News/ Companies / News/  ONGC exits Syria due to ISIS threat
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ONGC exits Syria due to ISIS threat

ONGC chairman Dinesh K. Sarraf says he cannot risk the lives of his colleagues

ONGC announced a 64% decline in profit to Rs1,286 crore for the company in the December quarter. Photo: ReutersPremium
ONGC announced a 64% decline in profit to Rs1,286 crore for the company in the December quarter. Photo: Reuters

New Delhi: The grip of the so-called Islamic State of Iraq and Syria (ISIS) over regions in West Asia has cost state-owned Oil and Natural Corp. (ONGC) two oil fields—one under production and the other under development—as the state explorer has withdrawn personnel from the region.

“I cannot risk the lives of my colleagues," said ONGC chairman Dinesh K. Sarraf, who on Thursday announced a 64% decline in profit to 1,286 crore for the company in the December quarter, on account of making a provision for impairment of oil field assets.

The prevailing low oil price and geopolitical tension in the region led to the writing down of realizable value of assets, considered a prudent accounting practice.

Sarraf said that ONGC Nile Ganga BV had in the past made decent returns from the Al Furat Project (AFPC) in Syria through its 16.6-18.7% stake in four production sharing contracts. ONGC was also developing another onshore oil block in Syria in which it had a 60% stake, the drilling work of which has now been suspended.

ONGC has now entirely withdrawn from the region. According to overseas reports which could not be independently verified, jihadi terrorists have taken over the oil fields.

Since the emergence of the ISIS in June 2014, many Indians are feared to have been kidnapped by the group. At present, at least two Indian teachers are suspected to be in their custody. Another 39 Indians, who have been missing since June 2014, are feared to have been kidnapped by the ISIS or groups associated with it in Iraq.

India is also wary of rising tension in the region, especially between Sunni Saudi Arabia and Shia-majority Iran—one of the main supporters of the Assad regime in Syria—following the execution of a Shia cleric by Saudi Arabia earlier in January. The Saudi embassy in Iran was ransacked in retaliation, which led to Saudi Arabia cutting diplomatic links with Iran. Bahrain and Sudan also followed suit, while the UAE downgraded ties with Iran. Recent statements from Saudi Arabia about sending troops to Syria have drawn sharp reactions from Iran and the Assad government.

Considering the geopolitical tension that involve two of India’s largest suppliers of crude oil—Iran and Saudi Arabia—New Delhi earlier this week roped in UAE’s Abu Dhabi National Oil Co. (ADNOC) to fill up oil in the 1.5 million tonne Mangalore strategic petroleum reserve. India is building a reserve of five million tonnes to tide over any possible supply disruptions.

Out of ONGC’s crude oil output of 31.5 million tonne, 17.5% comes from overseas fields, with Russia being the largest source. Oil fields in Vietnam, Venezuela, Azerbaijan, Columbia, Brazil and Sudan also contribute to ONGC’s production.

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Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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Updated: 13 Feb 2016, 02:55 AM IST
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