Poor water injection by ONGC cost ₹11,276 cr. in crude loss: CAG


India lost 3.8 million tonnes of crude oil worth £11,276 million in four years due to less-than-planned water injection by ONGC into its western offshore fields, the Comptroller and Auditor General of India (CAG) said.

Oil and Natural Gas Corporation’s (ONGC) aging Mumbai High, Neelam and Heera fields off the coast of Mumbai are in decline and water is being injected into wells to force out the remaining oil.

“There was insufficient water injection,” the CAG said in a report submitted to Parliament on Thursday.

“Water injection in the field has been impacted by aging injection infrastructure, frequent pipeline leaks due to poor injection water quality, failure to implement feasibility report inputs, and to some extent production from high gas-to-oil ratio wells.” This led to a sharp drop in reservoir pressure and adversely affected crude oil production.

“Faulty water injection impacted £7,802.50 million worth of crude oil production loss for ONGC and £3,474.29 million revenue loss for the Government of India through statutory regulations during the audit period (2014-15 to 2018-19). taxes,” it said.

CAG said this loss could not be viewed as delayed production but as a permanent oil loss.

“Furthermore, even exploiting part of this oil deficit requires additional investment, and this needs to be reviewed from the point of view of economic oil production,” it said.

The Mumbai High, Neelam and Heera fields contribute approximately 59% of the production of ONGC. The mature fields, which have been in operation since 1976 and 1984 respectively, are prone to production declines.

CAG said the lack of water injection is one of the main reasons for the lower crude oil production.

Crude oil that could not be recovered due to less water injection was 3.79 million tons during the audit period.

“The value of the 3.79 million tonne oil deficit due to less water injection was £11,276.79 million. This gives ONGC a value of the oil deficit after statutory levies of £7,802.50 million and the remainder is £3,474.29 million in lost revenue to the Government of India,” it said.

CAG said that since the fields began, there has been a continuous decline in reservoir pressure due to insufficient water injection, affecting crude oil productivity and its ultimate recovery.

“The decrease in reservoir pressure is further amplified by higher gas production from the reservoir,” it said. “Regular recommendations from the (Oil) Department on the importance of water injection, its distribution and maintenance of reservoir health have not been fully implemented.” ONGC’s performance benchmarking group has not benchmarked key performance indicators of reservoir health against the world’s leading exploration and production companies.

“Instead, it set static targets based on input received from its strategic business units. Additionally, as of 2019-20, the parameter ‘Reservoir Health’ is no longer part of the performance contract, indicating management is not monitoring reservoir health.

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