“Crude oil prices are not expected to come below $65-70/bbl for the next one year,” Rajesh Kumar Srivastava, director-exploration at ONGC, said in an exclusive interview to CNBC TV18 on February 16.
ONGC revised its net oil realisation target 4 percent upwards to $75.6 per barrel for FY22 from $72.6 per barrel earlier, the state-owned company said while announcing its results for the quarter ended December.
Rising crude oil and gas prices are a positive for ONGC and current oil prices are way above the breakeven level for the company, Srivastava said. Brent crude futures, an international benchmark, traded at $93.19 a barrel on February 16.
ONGC expects realisations for the current quarter at similar levels as in the third quarter of FY22. Crude oil realisations for FY23 are expected to be $65-70 a barrel.
The company said production levels for both oil and natural gas will grow from FY23 once the output starts from the KG Basin in December 2022.
“Production from the basin will reach its peak from FY24 onwards with 45,000 barrels per day of oil production and around 8-10 mmscmd (million metric standard cubic metres per day) of gas,” Srivastava added.
Enhanced output
During the Q3 results conference call, company officials highlighted a short-term production enhancement plan designed with the Ministry of Petroleum and Natural Gas wherein it set output targets of 60 mmtoe/63.1 mmtoe (million metric tonnes of oil equivalent) for FY24/FY25.
The major thrust is targeted from the east coast (KG 98/2) where a third well has been completed and the company hopes to produce 1.75 mmscmd of gas by March 2022. Production from the well is expected to peak from FY23-24, with 10.41 mmscmd of gas and 45,000 bpd of oil.
The company also highlighted its other major projects, including Mumbai High South Redevelopment Phase 4, which is 88 percent complete; Cluster 8, which is 94 percent complete; Mumbai High North Redevelopment Phase 4, which is 53 percent complete, and Heera RD project, which is 78 percent complete.
The capital expenditure on exploration would be about Rs 10,000 crore in FY23, Srivastava said. He expects spending on exploration to reach Rs 40,000-45,000 crore in the next three-four years.
ONGC beat analyst estimates when it reported a consolidated net profit of Rs 11,637 crore for the three months ended December, a more than threefold increase from Rs 3,637 crore a year earlier. On a sequential basis, profit fell 38 percent from Rs 18,749 crore.
The company received a deferred and current tax credit of Rs 9,320 crore in the preceding quarter of the current financial year. Adjusting for the tax credit, profit for the reported quarter is 23 percent higher on a sequential basis.
Consolidated revenue for the quarter rose to Rs 1.46 lakh crore from Rs 1 lakh crore a year ago and Rs 1.22 lakh crore in the preceding quarter.
ONGC shares opened at Rs 164.50 on the National Stock Exchange on February 16. The stock has generated returns of 60 percent during the past year.
