ONGC expects oil commencement from KG basin by Nov; plans OPaL restructuring

ONGC’s total crude production during the second quarter of FY24 dropped 2.1 percent

State-run Oil and Natural Gas Corporation Limited (ONGC) expects commencement of oil production from its Krishna Godavari basin latest by November-end, the company’s management said in a conference call.

Moreover, oil explorer ONGC said gas production from KG-DWN-98/2 block in Bay of Bengal would be ramped up by May or June of 2024.

The company expects oil production from KG basin to reach peak of 45,000 barrels per day (bpd) by financial year 2024-2025. Additionally, gas production from the basin is expected to reach 10 million metric standard cubic metre per day (mmscmd) by FY25.

The much awaited production commencement from ONGC’s deepsea project in the KG basin is expected to arrest the company’s production decline. Initially, oil production from the basin was scheduled to start from November 2021, but the deadline was delayed several times.

ONGC’s total crude production during the second quarter of FY24 dropped 2.1 percent to 5.249 million metric tonnes (MMT) from 5.360 MMT in Q2FY23. Meanwhile, ONGC’s natural gas production declined by 2.8 percent to 5.2 billion cubic meters (BCM) in Q2, as against 5.35 BCM last year. The company blamed decline in some of the matured fields and marginal fields for the production decline.

In Q2, ONGC’s consolidated net profit soared 142.4 percent at Rs 16,553 crore.

The company also plans capital expenditure of Rs 1 lakh crore for petrochemical projects by 2028-2030. ONGC said the investment would be used for two separate projects without disclosing additional details.

OPaL restructing

The company plans to bring in an equity partner in ONGC Petro additions Limited (OPaL) by financial year 2026-2027, after making the petrochemical company sustainable by FY25.

ONGC has proposed to infuse Rs 18,365 crore in OPaL, bringing ONGC’s shareholding to 96 percent and making the petchem company its subsidiary. However, ONGC said it does not intend OPaL to be its subsidiary nor it plans to merge it with ONGC.

“Once OPaL is turned around, the company plans to infuse a new equity partner by FY27. We would then like to bring down our share to 50%, again making OPaL a joint venture,” the company said in the call.

OPaL is a joint venture between ONGC, GAIL (India) and Gujarat State Petroleum Corporation Limited (GSPC).