State-run Oil and Natural Gas Corporation (ONGC) ended up paying an additional Rs.18,626 crore in subsidies over the period 2011-12 to 2014-15 by overstating its crude oil output, a CAG audit has found.
The company had to bear a larger share of subsidy due to overstatement of reported crude oil production by inclusion of condensate and off-gas (7.06 per cent of condensate and 1 per cent of off-gas).
Measurement of crude oil production should not include condensates & off-gas (a dissolved gas in crude oil separated during stabilisation process of crude oil).
Upstream national oil companies such as ONGC and OIL share the under-recoveries of oil marketing companies that arose from their having to sell petroleum products at subsidised rates.
Under the subsidy sharing system in place since 2012, an upstream company’s subsidy burden was to be calculated on the basis of its total crude oil production.