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A look at ONGC-II - Views on News from Equitymaster
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A look at ONGC-II
Oct 4, 2007

In the previous article, we looked at the location of ONGC’s domestic upstream assets. We answered the questions “where”- (basins) and “how many” (fields). In this article, we will answer the question “how much” and look at the oil and gas reserves that the company holds in its domestic upstream assets. How much?
Reserves are the oil and natural gas contained in underground rock formations. Quantities of reserves are estimated using geologic and engineering data keeping existing economic and operating conditions in mind. Reserve estimates change as additional information becomes available.

It may be noted that for the purpose of bringing natural gas and oil into a common unit of measurement, natural gas is measured in oil equivalent gas (OEG). OEG is the volume of natural gas that can be burnt to give the same amount of heat as a barrel of oil (6,000 cubic feet of gas = one barrel of oil. Alternatively, 100 cubic meter = 1 ton of oil)

Reserves are classified in 3 ways: Proved (1P), Proved + Probable (2P), and the Proved + Probable + Possible (3P).

Proved Reserves (1P): Oil and gas reserves, which have a reasonable certainty to be produced, using current technology at current prices and government consent are called proved reserves. It is also called as P90- having a 90% certainty of being produced in the foreseeable future.

ONGC's proved reserves in India
Particulars Crude Oil (MMT) Gas (BCM) Total OE (MMT)
  31-3-07 31-3-06 31-3-05 31-3-07 31-3-06 31-3-05 31-3-07 31-3-06 31-3-05
Offshore 222 212 228 185 161 178 407 372 406
Onshore 186 192 194 151 153 155 337 345 349
Total 408 403 422 336 314 332 744 717 754

Proved reserves are further subdivided into "Proved and Developed" (PD) and "Proved and Undeveloped" (PUD). PD reserves are reserves that can be produced with existing wells or from additional reservoirs with minimal additional investment. PUD reserves require additional capital investment (drilling new wells etc.) to bring the oil and gas to the surface.

ONGC's proved and developed reserves in India
Particulars Crude Oil (MMT) Gas (BCM) Total OE (MMT)
  31-3-07 31-3-06 31-3-05 31-3-07 31-3-06 31-3-05 31-3-07 31-3-06 31-3-05
Offshore 191 193 194 129 114 127 320 306 320
Onshore 145 149 153 114 117 120 259 266 273
Total 336 342 346 243 231 247 579 573 593

Probable Reserves (2P): Oil and gas reserves, which are reasonably probable of being produced using current or likely technology at current prices and government consent, are called probable reserves. It is also called as P50- having a 50% certainty of being produced in the foreseeable future.

Possible Reserves (3P):Oil and gas reserves, which have a chance of being produced under favorable circumstances only, are called possible reserves. It is also called as P10- having a 10% certainty of being produced in the foreseeable future.

We will profile the international upstream assets of ONGC in the next article.

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