ONGC to reverse long years of output decline from FY24

There is a positive narrative from ONGC after a long time. In FY23, ONGC is expected to reverse years of continuous decline in production and raise output after that. In last few years ONGC invested more than Rs59,000 crore on new finds. 

In FY22, ONGC produced 21.71 million tonne of crude oil and 21.68 billion cubic metre (BCM) of natural gas. Crude oil is refined to produce petrol and diesel, while natural gas finds application in electricity generation, manufacture fertilizers and as CNG in automobiles.

ONGC expects steady rise in output. In FY23, crude oil production is slated to increase to 22.823 million tonnes and gas production to 22.099 BCM. In FY24, crude oil production is likely to rise to 24.636 million tonnes and natural gas to 25.685 BCM. 

In FY25, the crude production is expected to rise to 25.689 million tonnes and natural gas output to 27.529 BCM. This will officially reverse 10 years of contraction in oil & gas output.

Government had tried to give away ONGC’s biggest oil and gas fields to private and foreign companies to boost output. However, it met with resistance internally and was shelved. 

ONGC is investing Rs59,000 crore in 20 major projects currently. This includes bringing to production oil and gas reserves found in deep-sea KG block and the fourth phase of redevelopment of Bombay High fields to arrest decline in ageing fields.

The first flow of oil from KG-D5 is expected in May 2023 with peak output of 45,000/bpd. This will translate into 2.25 million tonnes of crude annually and 12 million BCM of gas per day by FY25. ONGC will sustain annual capex of Rs30,000 crore to arrest future decline in output. 

ONGC is planning to enhance output and also monetize assets where such enhancement is not feasible.