ONGC can withstand oil prices in $60-90 range, says chairman

Oil and Natural Gas Corp (ONGC) can withstand a wide variation in oil prices, from $60-90 per barrel, as its presence across both upstream and downstream businesses helps it offset gains or losses linked to crude prices, chairman Arun Kumar Singh has said.

“We are prepared for $60-90 crude,” Singh told a press conference. “At group level, we are prepared for both (low and high gas prices).”

Exploration and production accounts for about 60% of the company’s profit, with other business segments accounting for the balance. ONGC owns controlling stakes in Hindustan Petroleum and Mangalore Refinery and Petrochemicals.


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ONGC does not need to change its medium-term strategy amid the current global energy crisis, Singh said.

“We don’t see any need to tweak our strategy and move away from oil and gas,” he said. “On energy equivalence basis, oil and gas would be the cheapest.”

Without the current geopolitical crisis, oil could have been trading at $60-65 per barrel, he added.

Over the next 7-10 years, however, renewable energy will accelerate as part of the company’s energy portfolio, contributing about 30% of the portfolio, Singh said. ONGC currently has about 2.5 GW of renewable energy capacity and aims to expand it to 10 GW by 2030.

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ONGC has been able to reduce its operating costs by 6-7% over the last year, but most of the savings have been negated by an increase in GST rates. Anticipating a decline in oil prices, ONGC had unveiled a major cost-reduction plan last year. Oil prices, however, have risen this year due to the US-Iran war.

ONGC plans to set up a global oil trading joint venture by the end of the year, Singh said, adding that a partner will be finalised soon. The trading JV will be based either in Dubai or Singapore, he added.

ONGC is also betting big on deepwater exploration. It aims to drill eight deepwater and ultra-deepwater wells in the current fiscal year and another 10 in the next fiscal year. It has a larger ambition of drilling 87 deepwater wells by 2030-31, which will require a total investment of Rs 1 lakh crore.