ONGC Rescinds Pacts With Schlumberger, Halliburton

ONGC Rescinds Pacts With Schlumberger, Halliburton

Oil and Natural Gas Corp (ONGC) has scrapped the initial agreements it signed with oilfield services providers Schlumberger and Halliburton to raise output from its ageing fields, and has decided to go for competitive bids, sources familiar with the matter said.

In December, the state firm had signed agreements with Schlumberger and Halliburton for enhancement of production from its matured fields of Geleki in Assam and Kalol in Gujarat, respectively.

“The deal is off. The board felt that the agreements can be challenged in future since there has been no open bidding for this,” a senior executive at ONGC said. “We have now invited expression of interest from interested parties to enhance our production,” he added.

Output at ONGC, which made up 57% of country’s crude production in 2016-17, has been stagnating for years, putting the company under tremendous pressure to look for innovative ways to raise output from its fields that are mostly old and witnessing a natural decline. To raise output, ONGC had partnered with Schlumberger and Halliburton, which were expected to bring in money and technology to the two fields of the state firm.

Last week, ONGC sought Expression of Interest from service providers for production enhancement contracts.

“ONGC intends to undertake production enhancement from its mature oil and gas fields under a ‘Production Enhancement Contract (PEC)’ with suitable Service Providers (SP) of global repute who have the expertise, financial capability and in-house technical resource to increase production and the recovery factor from such fields,” the company said in its notice that doesn’t specify oilfields that would be made available under this. The contracts will be 15 years or longer and the service providers will have to provide for capital and operational expenditure to raise output from the ‘baseline’ production, which will be decided by ONGC and vetted by a third party. ”The remuneration model will be a tariff which is to be paid in US$/barrel of oil and US$/MMBtu for gas for any “incremental” hydrocarbon produced and saved over the Baseline,” ONGC said in the notice.

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Prospective investors must submit their proposal by July 18. ONGC is organising a conference of prospective service providers on July 7 in Ahmedabad to offer them more details and seek their views on the nature of the contract that would give them confidence to bid, said a company executive.

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