India's ONGC Ltd. is actively looking to widen its upstream portfolio, as it believes that oil and gas will be a major component of the country's energy mix for the next three decades while pursuing new crude-to-chemicals projects to prepare for the changing energy landscape, its chairperson Arun Kumar Singh said at the India Energy Week in Goa.
Singh said the Indian government's move to release no-go areas in the Indian Exclusive Economic Zone for exploration and production operations covering a total area of 1 million sq km offshore areas in west coast, east coast and the Andaman and Nicobar Islands will provide renewed vigor to the country's exploration vision.
"Oil and gas will remain crucial to the Indian economy over the following three decades despite the ongoing transition," Singh said.
ONGC contributes around 74% of India's crude oil and around 63% of its natural gas production. The company is deepening its technical and operational expertise in deepwater E&P and is increasingly assessing the prospect of high pressure-high temperature and ultra-deepwater plays in India.
The company plans to undertake drilling and exploration in about 500,000 sq km area in the next 4-5 years.
"We are focusing on a threefold exploration strategy -- revisiting mature basins, solidifying emerging basins, and exploring potential new frontiers. The company is incessantly striving to bring in other non-producing sedimentary basins into the production fold with extensive exploratory efforts in data generation and interpretation," Singh said.
India's petroleum consumption is growing at a rate higher than the average global growth rate, Singh said.
"Energy demand is anticipated to rise even more as India rushes to meet its economic objectives. The key to grow amid a shifting energy landscape is to explore quickly and produce quickly," Singh added.
ONGC aims to achieve 2.2 million boe/d of hydrocarbon output by 2040 -- approximately 1.4 million boe/d of domestic production and 800,000 boe/d of production from international operations. Domestic oil and gas output in fiscal year 2022-23 (April-March) was more than 800,000 boe/d, while its output from overseas operations was 195,000 boe/d.
According to S&P Global Commodity Insights, ONGC's upstream spending is growing again after peaking in 2019. Domestically, in 2015-2019, more than 50% of total capital expenditures was directed to exploration drilling and project development. From 2018, the capex growth was driven by a rise in spending of projects, reflecting the start of development of KG-DWN-98/2 deepwater project in the east coast.
Since 2018, ONGC's investment focus has been on the development of KG-DWN-98/2 and maintaining production from major fields such as Mumbai High, Neelam Heera and from Bassein and Satellite assets. In addition, the company is investing in EOR/IOR techniques to enhance production from mature fields, according to S&P Global.
Many Indian refiners are looking to expand their petrochemicals footprint to prepare for a scenario in which rising electric vehicles sales takes away a part of the demand for transport fuels.
"ONGC is collaborating with other entities to explore opportunities in oil-to-chemicals, refining and petrochemicals," Singh said. "Growing India needs both conventional energy and renewables. As a national energy company in India, ONGC has to briskly walk both the ways, conventional and renewables."
ONGC is looking to set up two crude-to-chemicals projects in the country -- one in the northern region and another in the south.
Singh said that global oil demand is currently inflated and not the true reflection of real demand.
"We would like to see global crude prices range from $60-$75/b. In 2024, we expect crude prices to range from $70-$80/b," Singh said. "Global demand is a manufactured demand and it is not the real demand. That is why this shows up in oil prices," Singh added.
Commenting on the turbulence in the Red Sea, Singh said, the oil market has been oversensitive on the issue.
Many ships are avoiding the Red Sea and Bab al-Mandab Strait after a spate of attacks by Yemen's Houthi militants, threatening the strategic chokepoint for global seaborne trade. Many shippers, tanker owners and some oil companies have suspended voyages through the area.
