The Comptroller and Auditor General (CAG) has pulled up state-owned Oil & Natural Gas Corp (ONGC) for not placing desired emphasis on discovering oil and gas and being tardy in monetizing its discoveries.
CAG's report on Hydrocarbon Exploration Efforts of ONGC, which was tabled in Parliament on Tuesday, expressed concern at the company's lack of adequate efforts and results in new fields and wanted the oil ministry to reset annual targets set out in MoU that the firm signs with the government.
"ONGC did not place the desired emphasis on its core exploration activity. Coupled with the low priority on exploration are the anomalies in MoU target setting and reporting as well as performance measurement which can potentially mislead the stakeholder," it said.
CAG said ONGC showcases a healthy reserve replacement ratio while production continues to remain static.
"ONGC was also tardy in monetizing its discoveries which contributed to low production," CAG said.
"While external benchmarking of performance was not done, nationally ONGC had among the lowest efficiency in drilling compared to private as well as central public sector enterprise (Oil India Ltd) which led to non-achievement of work commitments and payment of liquidated damages," it said.
The official auditor also noted several deficiencies in operations (procurement, hiring and contracting).
"Though ONGC operates in a field of cutting edge technology, it did not have a system of independent assessment of its technical capacity which fails to assure its stakeholders," it said.
"The ONGC operates in its producing fields to meet both reserve accretion and production target. Lack of adequate efforts and results in new fields, coupled with the ageing of producing fields is a matter of concern for future," the CAG said.
For boosting the core activity of exploration, the audit has recommended a review of reserve replacement ratio (RRR) as a performance parameter for ensuring performance in exploration.
It was also for "urgent" action to set right the manning defficiencies to ensure better efficiency of exploration.
The CAG stressed on the need of ONGC going in for an early assessment of technology to assure the stakeholders that its technical capabilities were up to date.
It also wanted the company to leverage its experience and resources to be able to operate in a competitive regime and bid aggressively for highly prospective blocks.