KOLKATA (miningweekly) –  The Indian government is working on a mechanism that will ensure regular and ongoing review of large overseas investments committed by government oil and natural gas exploration and production (E&P) companies.

At an informal inter-Ministerial meeting early this month to review the performance of government E&P companies, the need for an institutionalised monitoring mechanism was expressed, considering the fact that overseas investments, already committed and planned, involved mega-investments and there was little scope for these going wrong.

The informal interaction was attended by Ministers in charge of home affairs, petroleum and natural gas, foreign affairs and commerce and industry. The Petroleum and Natural Gas Ministry was to frame an appropriate institutional mechanism and specify periodic review parameters for government companies and this would be put up for formal approval by the government, officials said.

The need for institutionalised review was also triggered by discussions on the inordinate delays on the part of government companies in taking a final investment decision (FID) for development of the Rovuma Area I offshore gas project, in Mozambique.

Significantly, following the meeting of the group of Ministers, Indian companies with a participating interest in Rovuma – ONGC Videsh, the overseas investment arm of national E&P major ONGC, and oil refiner-marketer Bharat Petroleum – approved an aggregate FID of $20-billion. This would be riding on construction of two liquefied natural gas trains of 12.88-million tons a year, plus development of the Rovuma offshore natural gas block.

The outcome of a review focusing on ONGC Videsh was also expected to have a bearing on government's decision, having since last year pushed to hive off ONGC Videsh and seek independent listing of the overseas investment E&P company.

Government officials said that the fresh focus on overseas investments by government companies needed to be viewed against the backdrop of falling domestic crude oil production and rapidly rising oil and natural gas production from these companies’ overseas assets.

Government data shows that total domestic crude oil production fell to 34.2-million tons during 2018/19, from 37.5-million tons in 2014/15. This contrasts with Indian companies’ overseas participating interests, which increased production of crude oil and natural gas to 24.7-million tons during 2018/19, up from 10.2-million tons in 2014/15.

For the government to achieve its target of reducing the country’s oil import dependency by 10%, from 83% at present, incremental production would need to come from overseas assets where yields as a percentage of domestic production had increased 36.8%, up from 14.7% in 2014/15; hence, government’s concern with monitoring government oil companies, the officials added.