GUWAHATI, Jan 29 - The sharp fall in price of crude oil in the international market has seriously affected the oil producing companies of India, including the public sector companies like the Oil India Limited (OIL) and the Oil and Natural Gas Corporation Limited (ONGCL), and in the last few months, the cost of production of those companies was more than the selling price.
Highly placed sources in the OIL told The Assam Tribune that almost all the oil producing companies are facing similar crisis due to the sharp fall in the price of crude oil in the international market and the situation would deteriorate if the condition continues for a long time.
Sources pointed out that the price of crude slumped from around $140 per barrel to $28 within a span of a year and the slum was more prominent in the last three months. In fact, some private sector companies, which work as service providers for the oil producing companies, were forced to go for massive lay-off all over the world, particularly in India.
Though the exact reason for the present situation is yet to be ascertained, one of the reasons attributed to the scenario is sudden increase of production by countries like Saudi Arabia and Iran. Sources said that Saudi Arabia increased production by 9 million barrels per day, while Iran increased it by 3 million barrels. This resulted in a massive slump in the global crude price.
Sources revealed that the cost of production of the OIL is around $35 to $36 per barrel, while the market price is around $28. Because of this situation, the OIL is practically running at a loss.
OIL sources admitted that because of the situation, the company has been forced to go for substantial cost-cutting, including travelling expenditures of senior officers. The CSR projects would also be seriously impacted. Though the ongoing exploration works in Mizoram and Andhra Pradesh are yet to be affected, if the present situation continues, the new exploration as well as production activities would be severely affected.
Sources further pointed out that the Government would have to take a call for the survival of the public sector oil producing companies if the present situation continues as no one knows what lies in the future. Some experts are of the view that the price of crude in the international market may fall further, while some are of the view that the situation would stabilize in the next few months. But all the oil producing companies of India would face severe crisis if the present situation continues, sources added.