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Cuts by Opec+ have impacted production of oil and gas: OVL

OVL is the overseas arm of ONGC and has been investing in oil and gas assets as part of India’s energy security strategy. (Bloomberg) Premium
OVL is the overseas arm of ONGC and has been investing in oil and gas assets as part of India’s energy security strategy. (Bloomberg) 

  • State-owned OVL's oil and gas production from overseas assets in FY21 was low by 12.8% and 13.3%, respectively, due to production cuts by Organization of the Petroleum Exporting Countries (Opec) and the geo-political situation in Venezuela, said ONGC chairman and managing director Subhash Kumar

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NEW DELHI: ONGC Videsh Ltd’s (OVL) oil and gas production from overseas assets recorded double-digit decline last fiscal following production cuts by the Organization of the Petroleum Exporting Countries (Opec) and geo-political situation in Venezuela.

“Production from overseas assets during FY21 was 13.039 mmtoe (million metric tonnes of oil equivalent). Oil production was 8.510 mmt (million metric tonnes), 12.8% less as compared to the production in FY20, and gas production was 4.53 bcm (billion cubic metres), 13.3% lower compared to FY20," Oil and Natural Gas Corp. Ltd (ONGC) chairman and managing director Subhash Kumar said at the annual shareholders’ meet on Friday.

“The lower production is mainly because projects in Russia, UAE and Azerbaijan have been impacted by compliance to production cuts agreed upon by the host governments of Opec+ group of countries. The geopolitical situation affected two projects in Venezuela namely Sancristobal and Carabobo-1," Kumar said.

OVL, the overseas arm of ONGC, has been continuing to invest in oil and gas assets abroad to sustain India’s energy security. It has, however, suffered reverses in its $2.1 billion acquisition of Imperial Energy Corp. Plc’s Siberian deposits.

It is also awaiting overdue dividends from the San Cristobal oil exploration project in Venezuela, while also fighting an arbitration case with the Sudanese government to recover about $400 million in unpaid oil dues.

ONGC’s standalone production during the year ended 31 March was at 42.4 million metric tonnes of oil and oil equivalent gas.

“Crude oil production, including joint venture production, was 22.5 mmt," Kumar said, adding that natural gas production, including those of joint venture, totalled 22.816 bcm. India’s oil output continued to falter, with crude oil production 2.29% lower in August compared with the year earlier. Gas output, however, rose 20.23%, according to the monthly production report by the ministry of petroleum and natural gas.

“In the wake of covid-19 outbreak, global oil demand plummeted to a record low. Much of the losses have however already been recouped—from the low of 78.5 million barrels of oil per day (bopd) in April 2020 to 94.7 million bopd in April 2021. Demand is expected to cross the pre-pandemic levels in 2022, according to the IEA (International Energy Agency)," Kumar said.

This comes in the backdrop of India spending 12 trillion annually to meet its energy needs. India is particularly vulnerable to changes in crude oil prices as any increase in global prices can affect its import bill, stoke inflation and swell its trade deficit.

The country spent $101.4 billion on crude oil imports in 2019-20 and $111.9 billion in 2018-19.

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