Global oil and gas investment will be 30% below pre-Covid level: ONGC

Says country's energy mix leans heavily on fossil fuels, which meet 90% of domestic demand; India's energy needs to at least double by 2050 with strong growth expected in natural gas

Global investment in the upstream oil and gas sector will be around 30 per cent below pre-pandemic levels according to Oil and Natural Gas Corporation (ONGC) Chairman, Subhash Kumar.

Delivering his speech at the 28th Annual General Meeting of the company, Kumar said, “Last year, global upstream investments sank to a 15-year low at $350 billion, as operators focused predominantly on conserving cash flows and protecting their balance sheets by cutting their expenditures. While investments are expected to increase by 3-4 per cent this year, it would still be around 30 per cent lower than pre-pandemic levels.”

“These developments, besides confirming the fabled fickle natured unpredictability of oil and gas prices, are also pointers toward the fact that oil and gas being vital sources of energy, are starved of much needed capital, the after effects of the same, could be radical and painful,” he added.

Sharing his views on the continued dependence of oil and gas, Kumar said, “The country’s energy mix is dependent heavily on fossil fuels, which cater to over 90 per cent of the domestic energy needs. All industry outlooks expect India’s energy demand to at least double by 2050 with strong growth expected in natural gas in all the scenarios.”

Commenting on the future output, he said, “Looking forward, over the next few years, the domestic production is expected to be driven by strong output from our Krishna Godavari deep-water field in the Eastern Offshore as well as Heera in the shallow waters of Western offshore.”

“During the year 2020-21, one major project (Redevelopment of Nandasan Field in Mehsana Asset) was approved at a cost of Rs 445 crore. During the current Financial Year, Redevelopment project of Linch Field at Mehsana Asset has been approved. With this, sixteen major projects (above Rs 100 crore) are presently under implementation with a total project cost of around Rs 61,133 crore and with envisaged oil and gas gain in excess of 100 million tonnes of oil equivalent (mtoe),” Kumar said.

“We have also started gas production from the second deep-water U1B well in KG-DWN 98/2 Block's Cluster-II on 31 August 2021,” he added.

Highlighting the performance of ONGC Videsh, Kumar said, “Production from overseas assets during financial year 2020-21 was 13.039 mtoe. Oil production was 8.510 million tonnes; 12.8 per cent less as compared to the production in financial year 2019-20, and gas production was 4.53 billion cubic metres, 13.3 per cent lower compared to financial year 2019-20.”

“The lower production is mainly because Projects in Russia, UAE, and Azerbaijan have been impacted by compliance to production cuts agreed upon by the host governments of Opec+ group of countries. Geopolitical situation affected two projects in Venezuela namely Sancristobal and Carabobo-1,” Kumar added.