Weekly Current Affairs

ONGC overstated crude oil output, says CAG report [Economy]

  • 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.