Subsidy burden hits ONGC's Mumbai High investment plans.

India's plan to boost oil production from its premier oilfield Mumbai High is being derailed by the huge subsidy burden on state-run energy explorer Oil and Natural Gas Corporation (ONGC), which needs a better oil price to justify the 10,000-crore investment required in the project.

Company executives say that the investment in the enhanced oil recovery project could add another 74 million barrels of oil to recoverable reserves of giant field, but to make the investment of 10,000 crore commercially viable, ONGC BSE 0.66 % should get an oil price of at least $66-76 per barrel. Currently it gets barely $40-44 per barrel as the government directs it to sell crude oil cheap to refiners to share the burden of below-cost sales of kerosene and administered rates of cooking gas and diesel.

ET