Deepwater Expansion Strategy
State-run explorer Oil and Natural Gas Corporation (ONGC) plans to invest ₹1 lakh crore over five years to drill 87 deepwater and ultra-deepwater wells by March 2031, as reported by The Financial Express and The Indian Express. The company expects to drill about seven deepwater wells this year and 10 next year, before sharply scaling up activity once additional seismic data becomes available.
The programme runs alongside the government's ₹84,000-crore offshore exploration support initiative, which ONGC expects will help generate better 2D and 3D seismic data and enable substantially higher drilling in frontier acreage. "We believe that the frontier that is awaiting us is deep water and ultra-deep water," Chairman and CEO Arun Kumar Singh told reporters after the company's annual general meeting.
Deepwater and ultra-deepwater basins are offshore zones with very high water depths. India's eastern and western offshore basins extend to depths of up to 3,000 metres and are estimated to hold more than 5,600 MMTOE of hydrocarbon potential, according to the Union ministry of petroleum and natural gas.
ONGC has so far secured about 68% of the total deepwater acreage awarded up to the ninth round of bidding under the Open Acreage Licensing Policy (OALP), giving it a dominant position as India steps up exploration of deeper offshore prospects.
Government Support and Production Challenges
The government's Samudra Manthan scheme will provide financial support for exploratory drilling in deepwater and ultra-deepwater areas and support building of common infrastructure for production of the discovered hydrocarbon, apart from funding offshore data acquisition and developing hydrocarbon manufacturing and services zones. The outlay is for implementation till financial year 2030-31.
The Centre expects the Samudra Manthan scheme to catalyse reserve accretion of over 600 million tonnes of oil and oil equivalent gas, while stimulating significant investments across the upstream oil and gas value chain.
India is the world's third-largest consumer of crude oil and also a major consumer of natural gas, but has a high degree of import dependency — over 88% for oil and about 50% in the case of natural gas. This makes the country's economy vulnerable to global energy market volatility, and even poses supply risks, as has been witnessed during the ongoing West Asia crisis. Moreover, the country's energy demand is on the rise, while domestic production is stagnant with numerous ageing fields witnessing natural production decline.
Hydrocarbon exploration is a capital-intensive and long-gestation activity, with a typical period of five to 10 years from the award of an exploration block to the commencement of commercial production. Further, existing oil and gas fields witness a natural production decline of around 6–7% every year, making continuous exploration and new discoveries essential to sustain domestic hydrocarbon production, as per the government.
Strategic Petroleum Reserve at Mangalore
ONGC will separately invest around ₹7,000 crore to build a 1.75-million-tonne strategic petroleum reserve at Mangalore, adding roughly one-third to India's existing dedicated emergency crude-storage capacity of 5.33 million tonnes.
The land has already been acquired and construction is expected to begin shortly. "The business models are being worked out… we will very shortly commence the process for construction," Singh said.
Overseas Trading Joint Venture
The company is simultaneously close to setting up an overseas oil and gas trading joint venture, with Dubai and Singapore under consideration. The proposed unit could trade about 50 million tonnes of crude, refined products and gas annually, apart from third-party volumes.
"We are very close to it. Already 95% work is done. We are waiting for one or two boxes to be ticked," Singh said, adding that the platform is expected to be in place by the end of the year. The trading unit is expected to begin operations in either Dubai or Singapore by the end of the year, according to the company's chairman.
The proposed trading joint venture is expected to handle trade of up to 90 million tonnes per year, with $1 billion of annual profits within two to three years, as reported by The Indian Express. ONGC's subsidiaries buy and sell around 70 million tonnes of crude oil per annum. The trading joint venture will bring all trading activities of the ONGC group under one roof.
Venezuela Operations
On ONGC Videsh's Venezuela plans, Managing Director Rajarshi Gupta said the company, after receiving an OFAC licence in July, is in discussions with Venezuelan authorities to finalise the operating framework. The framework is expected to be in place within three months.
Shares of ONGC closed at ₹232 on the BSE on Monday, down 0.09% from the previous close.