Despite spending millions in drilling 40-45 new wells annually, Oil India Limited (OIL) has experienced a dip in crude oil production. This is due to some protestors who are shutting down oil wells or tampering with them, demanding freebies and theft. This has forced the Maharatna Company to expand its target of new wells to 53.
Reasons for low production
A part of this drop is attributed to crude flow slowdown in old oil wells. Not only that, the people of Assam themselves are to be blamed. We have a habit of dragging the oil wells into petty issues not involving the oil industry. On the pretext of freebies or as a form of protest, we often shut down the oil wells or tamper with them. No wonder the numbers look worrying.
From 3.88 million metric tonnes per annum (MMTPA) in the 2011-12 fiscal, OIL’s production in Assam dropped to 3.22 MMTPA in the 2015-16 fiscal.
This has cost OIL a whopping Rs 45 Crore in production loss after locals turned off unmanned oil well valves or damaged machinery to stop the flow to crude collection centres in the last two festivals. This has translated into a substantial loss of royalty for the cash-strapped Assam government. The royalty, earlier fixed at Rs 420 per tonne, is now calculated at one-sixth of the international price of crude per barrel.
OIL ventures into start ups
The public sector giant recently announced The ‘Oil Startup Fund’ to encourage innovation and entrepreneurship in the Northeastern region and the company hopes that it will also lead to employment generation and creation of business opportunities in the region. The oil major was also working on tamper-free technology to pump out crude from its fields.
‘Because of local demands, we end up spending much more than the stipulated 2% of net profit on CSR. But time has come for the government to ensure the protection of oil wells so that production does not suffer’, OIL Chairperson and MD Utpal Bora said.