COVID-19: ONGC Cuts Gas Output as Shut Factories Refuse Supplies

Due to the coronavirus lockdown, vehicles run on compressed natural gas (CNG) too have gone off-road.

An ONGC employee at work. 

(Photo Courtesy: Twitter/MCX Tips Advisory‏)

With the unprecedented nationwide lockdown shutting down factories, ONGC has been forced to cut natural gas production by up to one-tenth as customers refused to take supplies because of business disruption.

Oil and Natural Gas Corp (ONGC), which produced 64.5 million standard cubic meters (mmscmd) of gas per day till earlier this week, has reduced the flow to 59.8 mmscmd on Wednesday, 25 March, and will further cut by another 3 mmscmd on Thursday, sources aware of the development said.

The company has received requests from customers for reduction in gas supplies of around 7.7 mmscmd. Besides this, another 4-5 mmscmd supply reduction requests have been lodged with the gas transporter GAIL.

The sources said these customers are largely small companies whose business has been completely shut because of the lockdown, and city gas distributors who have seen volumes vanish after CNG vehicles went off-road.

As a measure to check the spread of coronavirus pandemic, Prime Minister Narendra Modi on Tuesday evening announced a three-week-long nationwide lockdown. The lockdown meant offices and factories, barring those involved in essential supplies business, are shut and people asked to stay at home.

Some states like the national capital Delhi had last week declared lockdown and now this has been extended nationwide.

While factories across sectors have been shut down following the lockdowns, the ones seeking stoppage or reduction in gas intake are mostly in the Gujarat region.

Out of the 7.7 mmscmd gas reduction request received by ONGC, 6 mmscmd has come from the Hazira region, the sources said, adding the remaining reduction was sought by factories in Andhra Pradesh and adjoining areas.

Besides, GAIL has been piled with requests for cut in supplies for another 4-5 mmscmd along its Hazira-Vijaipur-Jagdishpur pipeline. It is the principal transporter of natural gas in India and also ships gas produced by ONGC.

GAIL would accommodate 4-5 mmscmd of reduction by cutting the use of imported liquefied natural gas (LNG) and fuel sourced from fields other than of ONGC, they said. Gas is used as a fuel in a variety of industries - from glass to fertilizer plants. Large factories such as fertilizer plants continue to use gas as they have been classified in essential commodities.

The demand for gas has also been hit by all vehicles, barring ones used by law enforcement agencies and that used in maintaining essential supplies, going off-road. This meant vehicles run on compressed natural gas (CNG) too have gone off-road in cities ranging from Delhi to Mumbai to Ahmedabad. Lesser CNG vehicles meant lesser need of gas and so city gas distributors too have sought a reduction in the volumes they used to take from GAIL/ONGC, the sources said.

Indraprastha Gas Ltd, the company that retails CNG to automobiles and piped cooking gas to households in the national capital and adjoining cities, has already shut two-third of its CNG dispensing pumps in view of the demand constraints. The sources said more factories and businesses are likely to be impacted by the shutdown in the coming days.