Financial Director Pomila Jaspal claims that ONGC is prepared for significant investments

11 Oct 2023 , 10:11 AM

According to the company’s finance chief, the high profits of the previous two years have strengthened the company’s balance sheet and prepared it for large investments. She also stated that the company’s annual capex will increase by 10% in the upcoming fiscal year due to increased upstream activity and double to Rs 60,000 crore after three years as the new petrochemical and green energy plans take shape.

In the two years leading up to March 2023, ONGC, India’s largest oil and gas producer, posted a cumulative profit of about Rs 80,000 crore. It currently has no net debt.

For ten years, the corporation has paid generous dividends to its shareholders totaling roughly 30-45% of its annual profits. However, during the past ten years, its yearly capex has remained constant at roughly Rs 30,000 crore.

Pomila Jaspal, director (financial), ONGC, said to ET in an interview that this was caused by the absence of new field development plans. Major oil discoveries haven’t been produced by ONGC in many years, and some of its gas discoveries couldn’t be commercialized because of low domestic natural gas prices.

‘There was a time when a mmbtu of petrol cost $1.79. No project could be economically evaluated by us. Therefore, most of the projects were still in cold storage at that time, according to Jaspal. Some gas projects have become viable and are currently being explored as a result of this year’s change in domestic pricing policy and higher prices, she noted.

The annual capex for ONGC is roughly split into two categories: output from existing fields (Rs 20–22,000 crore) and exploration and development (Rs 7–8,000 crore). According to Jaspal, ONGC anticipates the capex to increase by Rs 3,000 crore to Rs 33,000 crore in the upcoming year and stay there until 2026–2027. By 2026–2027, green spending may increase it by an additional Rs 2-3,000 crore, but the real increase in capital expenditures would occur once petrochemicals and green projects take shape, according to the expert.

By 2030, ONGC intends to invest Rs 1 lakh crore in green business and another Rs 1 lakh crore in petrochemical growth. This might result in an additional yearly expenditure of around Rs 60,000 crore in the final three years of this decade, on top of the ordinary oil and gas capex of Rs 33,000 crore. This might entail capital expenditures of over 90,000 crore per year.

According to Jaspal, the annual capex would likely amount to around Rs 60,000 crore in total and wouldn’t be very substantial. ‘There’s no doubt that it won’t be our own capital expenditure. Regarding green business, she remarked, ‘It will be collaborative, it will be a shared venture.

ONGC intends to start by purchasing small green projects before naturally developing larger ones.

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