Analyst Concall
ONGC sees KG Basin block oil production ramp-up only in Q4
This story was originally published at 18:05 IST on 13 August 2025
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--ONGC: Expect ramp-up in KG basin oil production from Jan-Feb
--CONTEXT: Comments by ONGC management in post-earnings analyst call
--ONGC: Apr-Jun revenue largely impacted by lower crude price realisations
--ONGC: ONGC Petro additions Ltd was EBITDA positive in Apr-Jun
--ONGC: No plans to pump money into subsidiary ONGC Petro additions Ltd
By Anand JC and Arya S. Biju
NEW DELHI/MUMBAI – Oil and Natural Gas Corp. Ltd. expects oil production from its deep-water block in the Krishna-Godavari Basin to ramp up and hit the target of 45,000 barrels per day only from the January quarter, the company's management told analysts in a post-earnings conference call Wednesday. ONGC currently produces over 30,000 barrels of oil per day from the KG-98/2 block, the management said.
The ramp-up would've happened sooner, but for the delay in the installation of the living quarters.
"(Living quarters) are to be installed as yet. It is fabricated; everything is ready. It has to be brought to India and then installed over here. Because of the monsoon season, we are not able to do it now," the company said. The work is now being postponed to around November-December, post which production could be ramped up.
For the ongoing financial year, ONGC expects crude oil production to be 19.93 million tonnes and gas production to be 20.11 billion cubic metres on a standalone basis. The state-run enterprise expects oil production in 2026-27 (Apr-Mar) to be 21 million tonnes, and gas production to be 21.49 billion cubic metres.
ONGC partnered with British Petroleum earlier this year, wherein the latter served as the technical services provider for the Mumbai High field, India's largest and most prolific offshore oil field. Teams from both companies have been working together since April to help ONGC arrest the production decline at Mumbai High field.
"The work has started. We have started looking at the various data that is available for MH (Mumbai High) field. We do expect that something tangible should start coming up from the fourth quarter of this year, from January-February onwards," ONGC said.
The management said it does not have any other arrangements with British Petroleum for any of its other fields. It acknowledged that there could be other onshore fields where additional production of oil could take place.
"New well gas, if you see, the production of the quantum is rising because we continue to look for newer avenues for production in the investing fields. So, it's a continuous process, and we expect that additional oil and gas should continue to flow from these mature fields also," the management said.
FINANCIALS
ONGC disclosed its June quarter earnings late Tuesday. It reported a net profit of INR 80.24 billion on revenues of INR 320.03 billion. Its top line for the reporting period fell 9% on year and on quarter. ONGC attributed this fall to lower crude oil realisation.
For the latest quarter, the company realised $66.13 per barrel of oil sold, compared to $83.05 a barrel in the year-ago quarter. However, its natural gas revenue increased on the back of a higher ceiling price of nomination gas to $6.75 million standard cubic metres per day from $6.5 mscmd before, and additional revenue from sales of gas from new wells. The incremental revenue from the sale of new well gas was INR 3.33 billion for the June quarter.
Statutory levies for the reporting period were INR 60.73 billion, down from INR 97.72 billion in the year-ago quarter. This 38% on-year decrease was due to the abolishment of the special additional excise duty.
ONGC's total expenses fell 11% on year and 21% on quarter to INR 224.69 billion in Apr-Jun. "The focus remains upon cost control. However, if the production increases, there is going to be the production cost also moving up accordingly," the management said.
Its other income for the period fell 38% on year to INR 12.11 billion. This was in part due to a cut in interest rates, the management said.
The state-run explorer expects to spend around INR 330 billion towards capital expenditure in the ongoing financial year as well as in FY27. Of this, it will incur INR 80 billion-INR 100 billion towards exploration, it said.
ONGC's subsidiary, ONGC Petro additions Ltd., reported an earnings before interest, tax, depreciation, and amortisation of INR 130 million for the reporting quarter, officially turning EBITDA-positive. "We are expecting the petrochemical cycle to start an upturn. Prices are looking up. And so, over the period of this year, we should expect that it should be much better (for OPaL)," the management said.
This subsidiary currently has a debt of INR 248 billion. ONGC does not intend to pump in money into the subsidiary to reduce this debt, or to increase equity share. "We do believe that the company (subsidiary), would be able to sustain its existing debt as of now, considering that the petrochemical cycle is expected to look up and the plant is running well," the management said.
On Wednesday, shares of ONGC closed 1.3% higher on the National Stock Exchange at INR 238.67. End
US$1 = INR 87.44
Edited by Tanima Banerjee
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