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ONGC sees fastest oil output growth in 20 years
India’s largest oil producer ONGC is expecting crude oil output to grow by 4-5pc in the April 2023–March 2024 fiscal year, which if achieved will be its fastest growth in two decades.
ONGC told investors on 15 February that following its October-December — the third quarter of India’s 2022-23 financial year — earnings, it sees production of crude oil rising by 1pc in 2022-23, reversing a six-year long streak of declining output.
In April-December, production at ONGC’s self-owned fields grew by 0.5pc to 374,000 b/d but total crude oil output, including from joint ventures, fell by 0.4pc in the same period.
ONGC, which produces 71pc of India’s oil output, has seen its crude production decline over the past decade as most of its fields are old and ageing, and its new discoveries faced cost escalations and technical delays.
The Indian government has over the past few years mulled selling some of ONGC’s biggest fields to private sector entities to boost output but such measures have faced resistance from the state-controlled company.
“We have arrested the decline. FY24 (2023-24) is going to be the year we will see the gains of our effort,” ONGC told analysts on the post-earnings conference call.
The major gains in oil production will come from KG 98/2 block on the eastern offshore at Kakinada, the largest subsea project in India, where the new floating production storage and offloading (FPSO) unit will start production from May-June 2023, ONGC said.
The Kakinada FPSO will see production of 38,000 b/d in 2023-24 and 44,000 b/d in 2024-25, ONGC said. According to earlier projections, peak oil production at the KG-DWN 98/2 block is likely to be around 80,000 b/d, equivalent to 14pc of India’s total output of 570,000 b/d in 2021-22.
ONGC is also counting on production at the western offshore blocks to rise by 10,000 b/d in 2023-24 following the deployment of the mobile offshore production unit Sagar Samrat last month.
Import dependence
The growth in crude output by ONGC will boost India’s efforts at enhancing domestic oil and gas production to reduce dependence on imports.
Prime minister Narendra Modi told international delegates at the India Energy Week earlier this month to invest in India’s oil exploration effortsas the country seeks to boost domestic productivity.
India imports over 80pc of its crude oil requirements, making its economy vulnerable to shocks such as the one witnessed in March 2022 following Russia’s invasion of Ukraine.
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