He told the media that a month ago, the Union Minister for Oil and Natural Gas, Dharmendra Pradhan, had kick-started...
the offshore project, off Kakinada in East Godavari district.
"Gas production from NELP Block KG-DWN-98/2 in deep waters off Kakinada is expected to commence from 2019 and ONGC would produce 25.87 mt of oil and 45.28 BCM of gas by 2034-35 from the field," he said, adding that Rs 33,000 crore would be spent on developing the offshore fields in the K-G.
The Chairman said the acquisition of 51.1 per cent stake in HPCL by ONGC was a very beneficial move, in view of the synergies between the two PSU companies, and "it makes ONGC a truly vertically integrated company. We are also working on the merger of HPCL and MRPL, another ONGC subsidiary, but it may take some time’’.
Shanker also spoke about the projects being taken up by ONGC abroad, in Abu Dhabi and Russia and elsewhere. In response to a question on shale gas, he said preliminary exploratory efforts were being made in Gujarat, but they were still at a very nascent stage. He said ONGC had spent Rs 66 crore in Andhra Pradesh on CSR activities during the last financial year.
Later in the afternoon, the CMD inaugurated the Nagayalanka onshore project taken up in Krishna district along with Cairn Energy India Ltd. Peak oil and gas production from the project is expected to be 2931 BOPD (barrels of oil per day) and 1.5 LCMD (lakh cubic meters of natural gas per day).
D M R Sekhar, Executive Director and asset manager of Rajahmundry, also spoke on the occasion.
In a related development, in a bid to check spiraling oil prices in domestic market, the government is proposing to levy a windfall tax on oil producers like ONGC as part of a permanent solution. \The tax, which may come in form of a cess, will kick in the moment oil prices cross USD 70 per barrel, says a media report.
Under the scheme, oil producers, who get paid international rates for the oil they produce from domestic fields, would have to part with any revenue they earn from prices crossing USD 70 per barrel mark.
The revenues so collected would be used to pay fuel retailers so that they absorb spikes beyond the threshold levels.
States too would be asked to cut sales tax or VAT to show a visible impact on retail prices. ONGC and Oil India Ltd had till June 2015 provided for up to 40 per cent of the annual fuel subsidy bill by way of providing discounts on crude sold to downstream refining and marketing companies, IOC, BPCL, and HPCL.
The government raised excise duty nine times between November 2014 and January 2016 to shore up finances as global oil prices fell, but then cut the tax just once in October last year by Rs 2 a litre.
The Centre levies Rs 19.48 as excise duty on a litre of petrol and Rs 15.33 on diesel. State sales tax or VAT varies from state to state. Unlike excise duty, VAT is ad valorem and results in higher revenues for the state when rates move up.