Calcutta, Oct. 17: Oil and Natural Gas Corporation (ONGC) is likely to close down some loss-making units oilfields and facilities to streamline production process.
Sources said the company would set up a committee soon to identify the portions that are saddled with high overheads and have measly earnings. The loss-making units are a source of deep concern for us. It is gnawing away at profits and this cannot continue, they added.
The sources, however, did not disclose the number of units that have been wallowing in the red. The committee will look into the economics of all units before coming up with its recommendations, they said.
ONGC chairman Subir Raha had said earlier his company relies heavily on Bombay High, which contributes more than 40 per cent to the overall production. Sources say the pattern of production is skewed with 10 fields accounting for 35 per cent and the rest contributing 65 per cent.
We are developing more such fields so that dependence on a single source can be reduced. There are too many fields that do not justify the overheads incurred on them. We need to take a hard look at streamlining operations, they added.
ONGC has decided to turn the focus on the top 15 fields that give the company 80 per cent of its production. Sources say some of the loss-making units are being run because there are political reasons to do so.
In the public sector, we are always susceptible to all kinds of pressures, from trade unions to political parties, even if there is a free-play of market forces. If we had the freedom to take decisions on closing down loss-making units or shedding surplus manpower, we would have been in a better financial position now, sources said.
On possible job cuts, sources said that ONGC would target a cut in surplus manpower about 20 per cent of its staff. We may not be able to cut down excess employees in one stroke, but we would have to prune the numbers to compete in the global market, sources said.
While steps are taken to raise the production of oil and oil equivalent gas from domestic fields, the ones abroad are expected to generate 20 million tonnes of oil and oil equivalent gas.