The Oil and Natural Gas Corp has deferred investments in Imperial Energy Plc to raise crude oil production and will rather consolidate the western Siberian operations of the UK-based firm it acquired recently.
ONGC Videsh Ltd, which earlier this month delisted Imperial from the London Stock Exchange after the $2.1 billion acquisition, was to invest about $1.5 billion in raising output to 35,000 barrels per day by the year end.
"We have decided to do analytical and consolidation studies rather than investing more in raising output," ONGC chairman and manging director and OVL chairman R S Sharma told reporters on the sidelines of the CII annual conference in New Delhi.
Pumping in more money to raise output had become unattractive after $100 a barrel was shaved off crude oil prices since August 2008, when OVL had bid for the Imperial, he said.
"Production level will be lower than the previously targeted," he said. "We want to conserve the resources for better oil prices (in future)."
Imperial had projected crude output to rise to 25,000 bpd (1.25 million tonnes a year) by end of 2008 but actual production was hovering around 7,000 bpd. This was to increase to 35,000 bpd (1.75 million tons) by end 2009. It is currently around 10,000 bpd.
Sharma said the will conduct field studies and do preparatory work for ramping up output in 2010.
