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ONGC to invest up to Rs 2 trillion by 2038 to meet net-zero goals

Production timeline from ONGC Videsh Limited assets in Colombia and Mozambique remain on track

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Subhayan Chakraborty New Delhi

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Oil and Natural Gas Corp (ONGC) Chairman and Chief Executive Officer (CEO) Arun Kumar Singh on Tuesday said the country’s top explorer would invest up to Rs 2 trillion by 2038 in two phases (Scope I and Scope II) to achieve emission targets.

These investments will involve components of green ammonia, hydrogen, solar, and other measures, he said.

Scope I refers to emissions from direct company-owned and controlled resources. Scope II pertains to purchase of fossil fuel based electricity, cooling or heating solutions deployed by a company in its processes.

The company remains on track to scale up its renewable portfolio to 10 gigawatt (Gw) by 2030, Singh told the shareholders of the company at its annual general meeting earlier in the day.
 

The CEO said the upstream oil and gas sector had seen renewed vitality with various global majors scaling back plans to cut output.

“We now believe that the world is embracing conventional fuel “and, not or” renewable energy, unlike a few past years. India is likely to grow strong in Oil & Gas and renewables,” Singh said.

Overseas assets

Singh said the production level of the Sakhalin-1 oil and gas field in Russia had reached the level of about 180,000 barrels per day (bpd), very close to the pre-crisis production level of about 200,000 bpd.

The production timeline of other international assets of ONGC Videsh (OVL), the overseas arm of the company, in Colombia and Mozambique are also on track. 

OVL owns a 20 per cent equity stake in the offshore Sakhalin-1 oil and gas field in the Russian Far East.

In response to international sanctions imposed on Russia following its invasion of Ukraine, Moscow had assigned the Sakhalin-1 project and operatorship to a regional subsidiary of Russian oil producer Rosneft. 

Russia then asked foreign shareholders in the project, including American major Exxon and SODECO from Japan, to apply to reinstate their shareholdings in the project before mid-November.

ONGC officials said the company had subsequently applied and had its shareholding reinstated. The company expects smoother operations to soon push the levels beyond the pre-crisis level.

Singh said another of OVL’s major overseas assets, the Block CPO-5 in Colombia, was producing 17,000 bpd. “Two wells are presently awaiting regulatory approval and soon after production is expected to reach 25,000 bpd,” he said. Initially awarded to OVL in 2008, the bloc saw commercial oil being struck in 2020. OVL currently holds 70 per cent participating interest.

In Mozambique, where OVL is executing its largest project, the security situation continues to improve and construction boots are already on the ground, the chairman said. OVL holds 30 per cent in the $20 billion ‘Offshore Area 1’ project, which has been under force majeure since April 2021 following attacks by Islamic State terrorists. The revocation of the force majeure is expected soon, company officials said.

The company’s overall net profit could have been higher in FY23 had it not been for a provision of Rs 12,107 crore during Q4 on account of disputed ST/GST on royalty. "However, the Company shall continue to contest such disputed matters before various forums," he stressed.

During 2022-23, the company attained its highest-ever standalone net profit of Rs 38,829 crore as against Rs 40,306 crore in the previous year.

Higher exploration, production

To further step up oil exploration, ONGC has deployed two drill ships and have commenced drilling of exploratory wells in the deep-sea of Mahanadi Basin of Eastern Offshore, Singh said.

The company has ordered 27 new-generation drilling rigs and 20 state-of-the-art hydraulic work-over rigs, of which 10 drilling and five work-over rigs have already been commissioned.

The company has also constituted an empowered in-house ‘Production Squad’ for rejuvenation of the Western Offshore oil block, he added.

ONGC is also collaborating with other entities to explore opportunities in the oil to chemical (O2C), refining, and petrochemicals value chains by setting up two greenfield O2C plants.

Eyes on oil exploration

- 461 wells dug in FY23, up from 434 in FY22

- 77 wells from current and previous years tested

- 46 wells found to be hydrocarbon bearing with a 60% success rate

- 8 new major hydrocarbon discoveries notified 

- 4 high pressure, high temperature wells in KG Basin and Mumbai Offshore dug

- 65,271 lakh line km of 2D seismic data acquired in Indian offshore basins 

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First Published: Aug 29 2023 | 9:22 PM IST

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