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Informist, Wednesday, Aug 5, 2026
 

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--ONGC: See total oil,gas output at 39 mln tn in FY27, 40 mln tn in FY28 
--CONTEXT: Comments by ONGC mgmt in post earnings analyst call
--ONGC: See global crude oil prices settle at $75 per barrel on West Asia war
--ONGC: To participate in next open acreage licensing programme in a big way
--ONGC: Prices of gas from new wells better, plans to explore more wells
--ONGC: Brazil project going on well, expect first oil from 2030 
--ONGC: Venezuela focus area, hope to see positive development soon
--ONGC: ONGC Videsh Sakhalin passed rough patch owing to Ukraine war
--ONGC: ONGC Videsh now making INR 10 bln annually from Sakhalin in Russia
--ONGC: Usual spend of $3.5-4 bln as annual capex to continue 
--ONGC: May see upside in exploration costs on Samudra Manthan plan

 

By Sunil Raghu and Adhithya Aji

AHMEDABAD/MUMBAI – Oil and Natural Gas Corp. Ltd. expects its crude oil and natural gas production to rise incrementally from the current year, and the ratio of output for the two fossil fuels to even out from the current period, when it is producing more natural gas than crude oil, the management told analysts and investors Wednesday. The company had detailed its earnings for the June quarter late Tuesday.
 
The state-owned company is primarily engaged in the exploration and production of crude oil, natural gas, and some value-added products. It produces around 70% of India's crude oil and 84% of its natural gas. Crude oil production accounted for nearly 42% of the company's turnover in the financial year 2025-26 (Apr-Mar) while natural gas production accounted for 51%.

 

The company's standalone crude oil output in the June quarter fell 5% on year to 4.45 million tonnes. Output fell to 18.355 million tonnes in FY26 from 18.558 million tonnes in FY25. Natural gas output declined 2% on year to 4.76 billion cubic metres in the June quarter. For FY26, output was 19.533 billion cubic metres, marginally lower than 19.564 billion cubic metres in FY25.

 

"Last year our oil plus gas standalone production, excluding diesel, was in the range of 38.87 million tonnes equivalent," a senior company official said. ONGC will take its production to about 39 million tonnes this year and 40 million tonnes next year, the official said.

 

POLICY PUSH

The management appears to have based its optimism on executing offshore projects and drilling more wells on the government's push for domestic exploration and production in the wake of the war in West Asia. "You see, we have been additionally spending about $3.5 billion to $4 billion on capex (capital expenditure). And that number remains. So that is the same situation. So we will see some upside in exploration capex with Samudra Manthan coming in," the company official said. Samudra Manthan is the national offshore exploration scheme of the government where it partly subsidises exploration costs.

 

Another factor behind ONGC's optimism is the better returns it now earns from the sale of natural gas from new wells. The company's June quarter gas price realisation under the nominated category was $7 per million British thermal units, up 5.4%. The price realisation from new gas wells was $13.31 per million British thermal units, up 62% on year. The share of new gas wells was 38% of the revenues of INR 39.98 billion from nominated fields. For ONGC, investing in new exploration wells would be more affordable as gas prices from these are higher. Gas drilled from new wells is eligible for a 20% premium over the domestically administered price mechanism.

 

ONGC said it also seeks to participate in the next round of the Open Acreage Licensing Programme in a "big way". Under this programme, companies can identify exploration blocks of their choice, instead of waiting for the government to offer pre-selected blocks. They can then submit an expression of interest for the area they want to explore, which the government offers for competitive bidding. The winning bidder eventually receives exploration and production rights. ONGC is reported to have won 15 blocks in the tenth round of bidding under this programme.

 

WAR OVERHANG

The company said its subsidiary ONGC Petro additions Ltd.'s operations were hit by the war in West Asia as the government advised the company to divert feedstock to produce liquefied petroleum gas. ONGC Petro additions owns and operates a 1.1 million-tonne-per annum greenfield petrochemical complex at Dahej in Gujarat. "The Q4 (Jan-Mar) of FY26 was very good, you would have seen. This quarter, you know, ultimately, the feedstock is linked with international prices of gas and naphtha. With Hormuz crises happening, our calculations had gone wrong," the official said. "Because of that, the first quarter of FY27 EBITDA, we were 57 crore (INR 570 million) negative, whereas FY26 EBITDA was 1,207 crore (INR 12.07 billion) positive."

On the company's overseas operations, ONGC executives said operations and production at ONGC Videsh Ltd.'s Sakhalin project in Russia, which had passed through a rough patch, had reached levels seen before the Russia-Ukraine war started in 2022. ONGC Videsh has a 20% stake in the Sakhalin-1 oil and gas project. It provides long-term crude oil and gas supply to India. The Russian government had taken over the Sakhalin fields after its war with Ukraine and converted it into an incorporated entity, till about December last year. "With Sakhalin back in our portfolio, ONGC Videsh is back in the robust profit scenario," the official said, adding that the subsidiary is making INR 10 billion from this field.

 

The management also said the company's Brazil project is doing well and it expects the first crude oil flows to come from this region by 2030. The company has also identified Venezuela as a "focus area", where it hopes to see some positive development "soon".

 

On crude oil prices, an ONGC official said the consensus was that oil prices would settle around $65 per barrel before the latest flare-up of tensions in West Asia. However, the management now believes crude oil will cost more than $75 a barrel in the long run.

 

ONGC reported a net profit of INR 170.34 billion on revenues of INR 464.40 billion for the June quarter. Wednesday, its shares ended at INR 240.20 on the National Stock Exchange, down 0.7% from Tuesday.  End

 

US$1 = INR 95.11

 

Edited by Shubhayan Bhattacharya

 

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