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ONGC to step up capex on exploration, does not expect windfall tax: CMD Mittal

ONGC has set an ambitious target to double its upstream production, triple the refining capacity, develop 1 gigawatt of renewable energy capacity, and set up a $1 billion corpus for new frontier opportunities by 2040.

May 30, 2022 / 04:56 PM IST
The company said its oil plus oil equivalent gas (O+OEG) production stood at 43.387 million metric tons of oil equivalent (MMTOE) and it aims for a growth of 18.2% over the next three years.

The company said its oil plus oil equivalent gas (O+OEG) production stood at 43.387 million metric tons of oil equivalent (MMTOE) and it aims for a growth of 18.2% over the next three years.

State-owned Oil and Natural Gas Corporation (ONGC) Ltd aims to spend Rs 30,000 crore on capital expenditure in 2022-23, of which a third will be on exploration activities, senior management told reporters.

The company is planning to invest aggressively in exploration activities to the tune of Rs 31,000 crore over the next three years, said Chairperson and managing director Alka Mittal.

She also said that it is unlikely that the government would impose a new tax on windfall gains made by the company as crude oil prices soared, given the government’s push on increasing production to reduce dependence on energy imports.

When asked to comment on reports that the government may consider a windfall tax on oil and gas producers, both state-owned and private, to offset the increase in public expenditure, Mittal said, “There is no communication as such, no development in that regard.”

“The government has been conveying to us in so many words that now is the time when we should go aggressive on our expenses when it comes to either exploration or production. I don't think they would be talking about anything like this (windfall tax); I am fairly confident of that,” she said.

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ONGC has set an ambitious target to double its upstream production, triple the refining capacity, develop 1 gigawatt of renewable energy capacity, and set up a $1 billion corpus for new frontier opportunities by 2040.

“Our strategy is to go aggressive on exploration, while ensuring that our capex for the production continues to be very stable and consistent, unlike what has happened in the world. There have been companies which have just withdrawn from investing in capex in the E&P sector,” she said.

The company said its oil plus oil equivalent gas (O+OEG) production stood at 43.387 million metric tons of oil equivalent (MMTOE) and it aims for a growth of 18.2% over the next three years.

"Our plan is that for each of the next three years, we want to add one lakh acreage for our exploration,” said Rajarshi Gupta, executive director- of corporate strategy and planning, who is slated to be the head of ONGC Videsh Ltd.

The United Kingdom has announced a 25 percent windfall tax on the profits of oil and gas firms and triggered speculations that other countries like India may follow suit. But ONGC’s senior management said that they expect the Indian government may refrain from doing it to encourage companies to spend from the profits to expand capacity.
Rachita Prasad heads Moneycontrol’s coverage of conventional and new energy, and infrastructure sectors. Rachita is passionate about energy transition and the global efforts against climate change, with special focus on India. Before joining Moneycontrol, she was an Assistant Editor at The Economic Times, where she wrote for the paper for over a decade and was a host on their podcast. Contact: rachita.prasad@nw18.com
first published: May 30, 2022 04:56 pm
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