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Wednesday, Aug 03, 2005

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ONGC may have to invest Rs 600 cr to rebuild Bombay High

Pratim Ranjan Bose

Kolkata , Aug 2

ONGC may have to invest Rs 400-600 crore towards rebuilding assets at Bombay High North which were destroyed in last week's fire. This does not include the contribution from the insurance agencies.

However, ONGC sources said the "company's investment plans for the year will not be affected." The company has already lined up more than Rs 10,000 crore of capital expenditure for 2005-06.

The sources said, in terms of the comprehensive insurance package, ONGC is eligible to claim for the loss of assets (including the platform and the Samudra Suraksha) the actual cost of rescue (including cost of fire fighting, notional salary of employees employed and cost on vessels employed by the company and other agencies) minus $20 million.

While the underwriters are assessing the loss claims, according to a rough estimate, the company has forwarded a claim of $260 million. While rebuilding the process platform, ONGC will introduce technology to increase production efficiency.

Meanwhile, considering the existing open market price for crude and the loss in production from the Bombay High North field, the company's cash flow will be affected to the extent of a notional $150 million (at the rate of $5 million per day) or over Rs 650 crore in August. The actual loss, however, will be lower as the company makes heavy price discounts to the oil marketing companies.

As the company targets to restore production of 68,000 barrels per day in four weeks and 83,000 in six weeks, the output loss in the second month is expected to decline to 17,000 barrels valued at $8,50,000 a day. Bombay High North field was producing at the rate of one lakh barrels a day till the disaster struck.

The crude produced by a number of production platforms in the field used to be processed at the affected platform. As production has been brought to a halt in the absence of the process platform, the company is trying to send the crude output from its biggest production platform NQ either through the Bombay High South facilities or direct to on-shore facilities.

Meanwhile, production at Bombay High South has dropped from 1.6 lakh barrels to 1.48 lakh barrels per day during the past four days.

The drop is partly due to bad weather conditions. Normal production is expected to be restored in a couple of days.

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