India - Oil India Limited OIL) Petroleum Project

 Oil India Limited petroleum project Report No: ; Type: Report/Evaluation Memorandum ; Country: India; Region: South Asia; Sector: Oil & Gas Exploration & Development; Major Sector: Oil & Gas; ProjectID: P009952 India: Oil India Limited (OIL) Petroleum Project (Loan 2785- IN) The India Oil India Limited (OIL) Petroleum project (Loan 2785-IN in the amount of US$140 million, approved in FY88), was prepared by the South Asia Regional Office. The Borrower's comments on the ICR are included. The loan, US$138.5 million of which was disbursed, was closed on September 30, 1994, the original closing date. The broad project objectives were to increase the availability of domestic hydrocarbon resources by: (i) increasing oil and gas production from the partially depleted Assam oil fields; and (ii) enhancing the borrower's capabilities to implement an efficient petroleum exploration program. Project components designed to achieve these objectives included: (i) an increase in oil production (including drilling of new wells) in the Assam oil field by 20 million tons over its productive life; (ii) a gas gathering and injection program for these fields; (iii) acquisition and processing of about 10,000 line-km of exploration seismic data and the drilling of ten exploration wells; and (iv) upgrading OIL's technical capabilities through technical assistance and training. The project objectives were exceeded. Oil production is expected to increase by 30 million tons, about 50 percent more than anticipated at appraisal, and gas production is expected to add another 9 million tons oil equivalent to available supplies. New discoveries have increased oil reserves by almost 8 million tons and 8 billion cubic meters of gas. OIL's technical capacity has improved, and with its acceptance of a greater degree of out-sourcing specialized field operations, its costs have decreased. The economic rate of return for the project is estimated at 97 percent, compared with 95 percent at appraisal. The Operations Evaluation Department (OED) rates the project outcome highly satisfactory, the sustainability as likely, institutional development as substantial, and Bank performance as satisfactory. These ratings are consistent with those in the ICR. The most significant lesson drawn from this successful project is that a State oil company such as OIL can maximize its productive performance when it concentrates its efforts on its core business and out-sources specialized services that can be effectively performed by competent private sector specialists. The ICR is satisfactory. It provides the information needed to evaluate the project results and the likelihood that OIL's planned future operations will enable it to obtain the maximum benefits from the investment activities implemented under the project. It also focuses appropriate attention on the important lessons from experience. No audit is planned.