MUMBAI, July 3: The Oil and Natural Gas Corporation (ONGC) says it may face a funds crunch if its outstandings, amounting to over Rs 2,200 crore, are not cleared within the next six months. This might affect its operations and the new projects on the anvil.

The oil companies owe ONGC more than Rs 1,700 crore. This includes Rs 1,100 crore from Indian Oil Corporation and over Rs 500 crore from the Oil Coordination Committee (OCC).

Chairman and managing director Bikash Bora told newspersons that funds stuck with the oil companies and OCC may not cause a problem immediately, but if the outstandings continue for another six months, it would create major problems of liquidity.

On the corporation's plans to arrest the decline in production from the Neelam oil field, Bora said ONGC was planning to join hands with a multinational firm for checking the decline and for expanding exploration activities in the western offshore.

The rates for oil produced, he said, would be international rates and not covered under the administrative pricing mechanism. "Once we get the approval from the government for this project, we will go ahead and form a joint venture," he said. The corporation also plans to undertake deep-sea exploration in areas under its control and form a subsidiary company for implementing the programme. A subsidiary company will be formed to offer ONGC's drilling services within the country and abroad.

"ONGC will go ahead and start an exploration programme in some of the deep-water areas it holds. However, the prices for oil produced from this area after discovery will be under the APM," Bora said. ONGC is also implementing seven major projects at a cost of Rs 2,190 crore as part of the memorandum of understanding for 1997-98.

Bora said the interpretation of seismic data acquired in deep-water offshore areas has led to identification of number of structures in the Krishna-Godavri, Cauvery, Kerala-Konkan and Kutch basins.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.