The recent tragedy in Mumbai Offshore was the worst in the Oil and Natural Gas Corporation (ONGC)’s recent history. It does not matter whether the dead were formally on the upstream giant’s employee rolls or not. There is clear damage in terms of image. Unsurprisingly, knives are out, with many experts and stakeholders calling for a partial or full privatisation of ONGC, citing, among other reasons, its poor performance on delivering new oil and gas discoveries since the 1990s.
Those who seek privatisation ask why we even need a State-owned oil and gas exploration and production company in this age of open economy, and cite the Unites States (US) as an example, which has no public sector oil company. But we are not the US. The US is a superpower, home to oil and hydrocarbons technology and services giants, and almost independent in terms of its energy requirement. China, a bigger but still an emerging economy, like ours, controls all its big oil companies for energy security. Russia, Malaysia, Saudi Arabia and Mexico do the same.
Despite the West’s push for net-zero emissions by 2050, and Prime Minister (PM) Narendra Modi government’s spectacular performance in terms of delivering on renewable energy targets, oil and gas will remain central to the economy for at least another two decades. We have to, therefore, push ONGC to keep playing a key role in energy security.
ONGC is still very much like an old-fashioned mining company, with bonhomie among its 30,000-plus employees, most of them engineers and technicians, unlike its downstream sibling, Indian Oil, which is closer-to-the-end users and, therefore, market savvy. It is due to this unique culture that the question of leadership — who is the chairman and managing director (CMD) — can make or break ONGC’s fortunes.
ONGC acquired a greater public profile in the early 2000s, thanks to its then CMD Subir Raha, a leader with vision and courage. The then PM Atal Bihari Vajpayee once intervened when a powerful minister opposed ONGC’s efforts to venture overseas and acquire a large equity stake in the lucrative Greater Nile oilfields in Sudan, which later boosted India’s clout in Africa. Under Raha, ONGC attracted talent and loads of capital into the company. But the CMD was not adept at keeping the upper echelons of government bureaucracy on his side.
ONGC soon began to lose the newly acquired drive, direction and ambition. Raha’s successors tried hard, but the gravitational downward slide proved to be unstoppable. Some pundits in the early 2010s prescribed bringing in foreign collaborators in all key offshore assets, including Mumbai High. The then PM Manmohan Singh, who had served on ONGC’s board in his earlier days, rejected the idea. But these episodes adversely impacted the company, and demoralised the staff.
Oil and gas exploration and production is a tough business. One needs nerves of steel to drill and produce hydrocarbons in the dense jungles of Assam or in deep waters of the Bay of Bengal or in the ghostly emptiness of Siberia, where ONGC Videsh operates. A motivated company performs better in such challenging situations.
This is not the time to privatise ONGC or put it to sleep, slice by slice, asset by asset. India is the most vulnerable large economy in the world in terms of energy security. We import 86% of its total requirement of oil, and over 54% of its gas needs. Even in renewables, nearly 90% of all solar power equipment is imported.
This is the time to grant full and genuine autonomy to all strategically important State enterprises. Giants such as ONGC should be allowed to hire the best management and technical talent, including for the position of CMD, at market rates. ONGC has the potential to be among the great oil and gas companies in the world, and a guarantor of India’s energy security. Helping strategically important companies like ONGC realise their full potential will be the nation’s best tribute to the brave men who sacrificed their lives serving the Mumbai Offshore.
Narendra Taneja is a New Delhi-based energy expert
Courtesy – Hindustan Times