India's ONGC domestic oil, gas output falls, overseas assets show growth

India's Oil and National Gas Corporation domestic oil and gas output fell in the fiscal year ended March 2024 as recoveries slowed from aging fields, but its overseas arm posted higher production due to strong yields from its assets in Sudan, Venezuela and Columbia.

The flagship explorer's domestic crude production declined 1.6% year on year to 21.14 million mt in FY 2023-24 (April-March), while its gas production fell 3.3% year on year to 20.65 Bcm. Domestic output was lower despite the company's capital expenditure hitting a record high of about $4.4 billion in FY 2023-24, rising from about $3.6 billion in FY 2022-23, ONGC said.

For 2023-24, ONGC realized a crude price of $75.9/b, down 18.4% year on year, and a natural gas price of $6.6/MMBtu, down 10.8% on the year.

Over January-March, the state-run explorer's crude production increased 2.4% year on year to 5.36 million mt, while gas output declined 3% from the previous year to 5.1 billion cu m.

Output slows from aging fields

India's upstream output has seen a compound annual decline of nearly 1.1% over the past 10 years due to a natural drop in production from mature fields as well as limited monetization of existing discoveries and a reduction in new discoveries, according to S&P Global Commodity Insights.

ONGC's growth path continues to remain challenging but the company's project development pipeline, which includes the K-G Cluster III and the Daman Upside Development project, could be game changers and boost overall production in India in the coming decade, according to Commodity Insights.

India has been accelerating its push for energy security at a time when geopolitical turbulence and clean fuels are altering the global energy landscape. However, analysts and trade sources are of the view that New Delhi has an uphill task at hand as far as domestic output is concerned.

In FY 2023-24, ONGC declared 11 discoveries with six on-land assets and five offshore assets. It monetized seven discoveries last year. In FY 2023-24, ONGC registered a reserve replacement ratio of 1.15, marking the 18th consecutive year that it has maintained a ratio above one.

ONGC drilled 541 wells in FY 2023-24, the highest in the past 34 years, comprising 103 exploratory and 438 development wells.

Higher overseas assets output

Overseas arm ONGC Videsh Limited's oil and gas production increased to 10.52 million mt of oil equivalent in FY 2023-24, from 10.17 million mt of oil equivalent in the previous financial year.

"This positive performance was driven by strong contributions from five operated and jointly operated assets, namely MECL and CPO-5 in Colombia, GPOC and SPOC in South Sudan, and San Cristobal in Venezuela despite natural decline, geopolitical tensions and local issues," the company said.

ONGC Videsh has set a production target of 11 million mt of oil equivalent for FY 2024-25 and 11.22 million mt of oil equivalent for FY 2025-26, a company official said.

ONGC Videsh achieved a turnover of about $1.1 billion in FY 2023-24, falling from about $1.4 billion in the previous year, mainly due to non-accounting of revenue from Sakhalin 1, while its crude price realization fell 4% year on year.

New Delhi has announced numerous upstream policy reforms to attract international oil companies. ONGC is also looking for international partners, having deepwater and ultra-deepwater operating experience, for its difficult fields and acreages in the country.

Highlighting some key achievements for the fiscal year, ONGC said the company signed a joint venture agreement with NTPC Green Energy Limited to develop renewable energy projects focusing on offshore wind. It also signed a cooperation agreement with TotalEnergies to carry out methane emissions detection and measurement campaigns.

ONGC said that Prime Minister Narendra Modi flagged off the first crude oil tanker from Krishna Godavari deepwater block earlier this year.