ONGC Adopts New ‘Energy Strategy 2040’, Targets Doubling Of Oil, Gas Production 

Oil & Natural Gas Corporation Ltd. has targeted doubling oil and gas output from its domestic and overseas fields and expansion of its refining capacity three-fold alongside diversification into renewables in a new vision document for 2040, its Chairman Shashi Shanker said.

“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,” he said.

The firm produced 24.23 million tonnes of crude oil and 25.81 billion cubic metres of natural gas from its domestic fields in 2018-19. Another 10.1 million tonnes of oil and 4.736 bcm of gas were produced from its overseas assets.

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

Shanker was quoted as saying in the company’s latest annual report that the ONGC board recently approved the business roadmap for the company and its other group entities—‘ONGC Energy Strategy 2040’.

This strategy entails ONGC achieving “three times revenue distributed across exploration and production, refining, marketing and other businesses; four times current profit-after-tax, with 10 percent contribution from non-oil and gas business; and 5-6 times current market capitalisation”, he said.

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

The document targets cumulative upstream output (local and overseas) almost doubling from current levels with 2 percent and 5 percent annualised growth in domestic and international operations respectively.

With two 35 million tonnes 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 million tonnes. Also, expansion in petrochemicals will be prioritised, the company said.

Besides, ONGC plans to make investments in renewables energy sources with a target to create 5-10 gigawatts portfolio with a focus on offshore wind power.

ONGC has been under pressure to reverse the falling output from its aging fields, where natural decline has set in. It’s investing heavily to arrest the domestic fall while at the same time aggressively look for assets overseas.

“The strategic roadmap also looks to create long term optionality through investor play (venture fund corpus of about $1 billion) in select frontier themes such as clean energy, artificial intelligence or reservoir/field services technology,” it said.

In upstream oil and gas exploration and production, priority would be accorded to select difficult plays (high-pressure high temperature, ultra-deepwater) with high-prospectivity and low stretch from current core, development of in-house oil recovery solutions to maximise legacy production, exploration-focused technology partnerships, among others, the report said.

Internationally, 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, the annual report said.

ONGC said there was significant room for deriving operational synergies between HPCL and MRPL through integrated crude sourcing, centralised trading, capability and infrastructure sharing.

Expansion in petchem (petroleum chemicals) is based on the robust demand of outlook of annualised growth of 8-9 percent for the country as well as ONGC’s significant presence in the market through its subsidiaries.