ONGC suffered Rs.8,000 crore loss for poor rig management: CAG

US-FRACKING-IN-CALIFORNIA-UNDER-SPOTLIGHT-AS-SOME-LOCAL-MUNICIPA (File) The CAG said four of six ONGC-owned offshore rigs have outlived their economic usable life of 30 years

India's official auditor, the Comptroller and Auditor General (CAG), on Wednesday censured state-run Oil and Natural Gas Corp (ONGC) for poor planning in hiring and use of drilling rigs that resulted in a loss of Rs.7,995 crore.

In a report tabled in parliament, the CAG said ONGC's non-productive time or idling time of rigs ranged between 19 and 23 per cent over 2010-14.

"The bulk of idling time costing Rs 6,418 crore was due to factors which could have been controlled by the company," CAG said.

The company also did not adhere to safety procedures and continued drilling and testing operations even after an anchor of its rig, Sagar Vijay, had broken, the report said.

A second anchor of the rig snapped, which caused drifting of the rig from its location, owing to which the well had to be closed and abandoned, it said.

Consequently, an expenditure of Rs 1,577.27 crore incurred by ONGC on drilling at the original location, and drilling of a relief well by using another rig proved avoidable.

"The insurer did not honour the claim of ONGC on the ground that the latter had not followed recognised safe operating practice," the report said.

Failure on the part of the company led to a situation wherein rigs were being operated with outdated and obsolete equipment, the official auditor said.

"The Annual Rig Deployment Plans (RDPs) had an in-built inefficiency," it said.

Whereas there was no uniformity in preparation of annual RDPs among the assets and basins of ONGC, the company failed to decide a policy on acquisition of new offshore rigs for over a decade— from 2002 to 2015.

The CAG said four of six ONGC-owned offshore rigs have outlived their economic usable life of 30 years.

It asked ONGC to ensure that the plans—five year plan, annual plan, rig requirement plan, rig deployment plan—are complete and consistent with one another and are complied with.

The situation where one out of every three wells drilled is un-planned needs to be corrected, it said.

Besides, the company did not adhere to the repair schedule for dry dock management and major lay-up repairs of jack-up rigs which was against an efficient operational practice, the CAG said.

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