Wednesday, October 26, 2011

CAG slams ONGC for tardy exploration

CAG slams ONGC for tardy exploration
Press Trust of India / New Delhi 05 Aug 10 | 06:39 PM

Premier auditor the Comptroller and Auditor General (CAG) has slammed Oil and Natural Gas Corporation (ONGC) for systemic deficiencies in oil and gas exploration effort that resulted in no discovery in 16 blocks despite spending over Rs 1,460 crore.

The CAG in its report tabled in Parliament today said the performance audit of ONGC in its 37 shallow water blocks "revealed systemic and compliance deficiencies."

The deficiencies relate to "absence of norms for key activities, delays/failures in carrying out acquisition, processing and interpretation (API) of seismic data, delayed tendering, mismatch in planning of exploration activities".

The sluggish effort resulted in "unfruitful expenditure (of Rs 2,136.45 crore) and avoidable expenditure (of Rs 94.67 crore) besides entailing liability for payment of liquidated damaged (Rs 252.20 crore)", it said.

The audit was spread over 21 blocks that had been given to ONGC on nomination basis and 16 it had won under the New Exploration Licensing Policy (NELP).

CAG said ONGC made no oil and gas discovery in any of the 16 NELP blocks as all the wells drilled were found to be dry.

"The company had surrendered/proposed to surrender 10 of the 16 NELP blocks after incurring substantial expenditure of Rs 1,461.36 crore over the period 2004-08, though the company had bid for the blocks after analysing them," the report said.

In 7 of these blocks, ONGC took 8-12 months to complete Environment Impact Assessment (EIA) studies which had adverse impact on timely API of seismic data. "In the absence of norms, the reasonableness of time taken in completion of EIA studies and API could not be ascertained in the audit," it said.

"The pace of completion of API was also very slow in a number of blocks with the result that exploration commitments in the nomination as well as the NELP blocks could not be completed in time," CAG said.

"The slow pace coupled with the mismatch between rig deployment plan and availability/ deployment of rigs affected in fulfilling the drilling commitments. This had a cascading adverse impact as exploration blocks had to be surrendered after incurring substantial expenditure."

CAG asked ONGC to complete exploration activities in a time-bound manner to avoid surrender of blocks, prescribe norms for EIA, initiate tendering process well in advance and ensure availability of suit

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