ONGC Aims To Raise Oil And Gas Output 19% In Three Years
ONGC expects a ramp-up in gas production on the back of the KG 98/2 block, starting December quarter of the current fiscal.
Oil and Natural Gas Corp. is aiming to increase its total oil and gas production more than 19% by the financial year ending March 2027.
In its latest earnings call, the company said that its total production could grow to 47 million metric tonne of oil equivalent by FY27. This is a 19.13% increase from the 39.45 million metric tonne of oil and gas produced in FY24.
Total Production Target
The oil producer's oil and gas output in fiscal 2024 stood at 19.5 million metric tonne and 20 billion cubic metres, respectively, the management said.
The company expects oil production to rise to 21.97 million metric tonne and gas production to reach 25.5 billion cubic meters by fiscal 2027.
Lower Gas Production In FY24
ONGC's total crude oil production rose 2.4% sequentially in the fourth quarter ended March 2024. Its gas production fell 3% during the same period.
The company attributed the lower gas production in quarter and fiscal ended March 2024 to lower production from maturing fields as well as delays in the KG 98/2 project.
However, going forward, the public sector undertaking does expect a ramp-up in gas production on the back of the KG 98/2 block, starting December quarter of the current fiscal. Management also stated that the full gas production potential of the block would be met in three months ending March 2025.
KG 98/2 Block Production
The current KG 98/2 block oil production stands at 12,000 barrels per day, the company said. It expects this crude oil production to rise to 20,000 barrels per day by the third quarter of fiscal 2024 and to 45,000 barrels per day by the fourth quarter of financial year 2024-2025.
With regards to gas production, it is expected to rise to 10 million metric standard cubic metres per day in Q4 FY25.
Capex
In terms of capital expenditure, ONGC spent Rs 37,000 crores in FY24, which is 22.5% higher than the previous fiscal.
The company stated that the KG 98/2 project was the primary reason for the higher capex. The company identified problems with the change order and settlement with the project's contractors, leading to a significant investment in capital expenditure. Additionally, the company allocated certain funds for the replacement of a pipeline in the Western Offshore region.
For FY25, the company has guided a capex in the range of Rs 33,000 crore to Rs 35,000 crore.
