ONGC aims to double oil & gas output, treble refining

State-owned Oil and Natural Gas Corp (ONGC) has prepared a blueprint for doubling its oil & gas output from its domestic and overseas fields and expanding its refining capacity threefold apart from diversification into renewables, as per its new vision document for 2040.

According to ONGC chairman and managing director Shashi Shanker, ONGC Energy Strategy 2040 envisions the company as a diversified energy company with a strong contribution from non E&P business; 3X revenues and about 5-6X market capitalisation.

As per the company records, ONGC produced 24.23 million tonne (mt) of crude oil in the 2018-19 and 25.81 billion cubic metres (bcm) of natural gas from its domestic fields. Another 10.1 mt of oil and 4.736 bcm of gas were produced from its overseas assets.

It posted a turnover of Rs 1,09,654 crore and a net profit of Rs 26,715 crore in the year ended March 31, 2019. As on August 16, it had a market capitalisation of Rs 1,64,458 crore.

The ONGC Board recently approved the business roadmap for the company and its other group entities -- 'ONGC Energy Strategy 2040', according to the company's annual report.

As per Shanker, the strategic roadmap envisions a future-ready organisation whose growth is predicated on a few important planks: consolidation of core upstream business (domestic and international); expansion into value accreting adjacencies in the oil & gas value chain (downstream and petrochemicals) and diversification into renewables (offshore wind) and select new frontier plays through a dedicated venture fund.

The plan targets cumulative upstream output (local and overseas) almost doubling from current levels with 2% and 5% CAGR in domestic and international operations, respectively.

According to the company officials with two 35 mt per annum of oil refining capacity vested in its two subsidiaries – HPCL and MRPL, ONGC is targeting to raise this capacity to around 90-100 mt.

The officials said ONGC has plans to make investments in renewable energy sources with a target to create 5-10 gigawatt portfolio with a focus on offshore wind power.

According to the analysts, ONGC has been under pressure to reverse the falling output from its aging fields in recent years. As a result of which the company had been forced to invest heavily, while at the same time aggressively look for assets overseas. ONGC is looking forward to investing around Rs 83,000 crore in 25 major projects to boost oil and gas production, which has stagnated over the last few years. The cumulative oil & gas gain from these projects is expected to be over 180 mt of oil and oil equivalent gas in their life cycle.

The company executives said in the upstream oil & gas exploration and production, priority would be accorded to select difficult plays (high-pressure high temperature, ultra-deepwater) and low stretch from current core, development of in-house enhanced oil recovery solutions to maximise legacy production, exploration-focused technology partnerships, dedicated marginal fields unit as well as building decommissioning capabilities.

Internationally, the annual report said the focus shifts to plays with volume in host regimes with a positive government-to-government relationship with India to secure stable energy long-term supplies.