INDIA CEO SERIES: ONGC to venture into oil trading, SPRs; upstream remains at the core

The India CEO Series by S&P Global Energy is a compilation of exclusive interviews by Asia Energy Editor Sambit Mohanty with some of the leaders of the biggest energy companies in India.

India's state-run ONGC plans to diversify into oil and petrochemicals trading and build strategic petroleum reserves to bolster supply security, while sustaining robust investment in core upstream operations domestically and internationally, chairman and CEO Arun Kumar Singh said.

"Our new trading unit should be operational in about two months. We will be aiming to trade for our own requirements as well as doing some third-party trading for both crude and products," Singh told Platts, part of S&P Global Energy, for the India CEO Series.

The strategy will position ONGC alongside global oil majors with trading arms and enable its group companies -- Hindustan Petroleum Corp. Ltd, Mangalore Refinery and Petrochemicals Ltd and ONGC Petro Additions Ltd. (OPaL) -- to present a unified front in the global market and leverage arbitrage opportunities, according to Singh.

"ONGC produces the barrels, HPCL and MRPL import crude independently, ONGC Videsh (OVL) sells its own equity production, and OPaL sources its own feedstock -- each meeting the market separately. A single trading face gives one commercial interface, better bargaining power, and an end to value leakage within the group," Singh said.

The move could generate opportunities worth around $1 billion annually through optimized crude sourcing, freight management and structured risk management, he said.

The trading unit, which ONGC is considering locating in Dubai or Singapore, will involve HPCL and MRPL as stakeholders alongside an international trading partner currently being shortlisted, Singh added.

SPR expansion, deepwater push

The Indian government has asked ONGC to construct a new strategic petroleum reserve facility in Mangalore with crude oil storage capacity of 1.75 million metric tons, Singh said, amid global supply disruptions and rising domestic demand.

"This will add roughly one-third to India's existing 5.33 million mt of dedicated emergency storage and is the first instance of a state-owned producer developing and financing such a facility on its own balance sheet," he said, adding that ONGC's board had accorded its approval for the project.

Singh said that half the capacity would be reserved for the country's strategic needs as per the government's plan. ONGC has sought the government's permission for the commercial use of the remaining half of its capacity.

India's strategic petroleum reserves currently provide coverage of about 9.5 days of net oil imports, while state-run oil companies hold crude and product storage equivalent to 64.5 days of net imports, bringing total national storage to roughly 74 days, according to petroleum ministry data.

"The location for building the SPR is not incidental. Co-locating storage with a group refinery gives operational flexibility, permits opportunistic filling when the forward curve favors it, and provides the physical backbone for the trading capability being built," Singh said, referring to the MRPL refinery.

Meanwhile, the Indian cabinet in late July approved investments of up to 840 billion Indian rupees ($8.8 billion) over five years to advance offshore oil and gas exploration under the National Offshore Exploration Scheme. The initiative is expected to catalyze reserve accretion of over 600 million mt of oil equivalent by fiscal 2030-31, the petroleum ministry said July 31.

"With government funding now supporting deepwater exploration efforts, the financial pressure on ONGC's balance sheet should ease significantly," Singh said. "ONGC's answer is Project DeepX, which is doubling deepwater drilling effort over two years."

In fiscal 2025-26, ONGC produced 20.501 million mt of crude oil and 19.966 billion cubic meters of gas, including joint-venture share, contributing over 73% of India's crude production and about 57% of its gas output, Singh said.

With a significant portion of India's domestic crude coming from mature and aging fields, ONGC has embraced enhanced recovery techniques and was expanding collaboration with BP, ExxonMobil, Chevron, TotalEnergies, Petrobras, Petronas, Equinor, and Shell, Singh said.

"One distinction is worth drawing -- for mature fields where ONGC brings the operating base, a services-and performance-fee model works; and for high-cost deepwater, such as KG-DWN-98/2, the partner must take financial participation and share risk," he added.

Overseas footprint

On overseas operations, Singh highlighted some positive developments: the formal acquisition of a 20% stake in Sakhalin-1 LLC on Dec. 5, 2025; and ONGC Videsh receiving a specific license from the US Office of Foreign Assets Control permitting continued operations in Venezuelan assets.

"Securing equity oil today is as much about regulatory and diplomatic access as bidding capacity, and ONGC has retained positions in three of the world's most difficult jurisdictions through exactly that route," Singh said, adding that forward strategy favors fewer, larger positions in proven provinces, with Ghana, Suriname and Brazil under evaluation.

On energy transition, Singh said ONGC Green Ltd. had reached 2.853 gigawatts against a 10 GW target for 2030 through wind capacity acquisitions from PTC Energy and a joint venture with NTPC Green for the takeover of Ayana Renewable Power.

"The risk for a company like ONGC is not about moving too slowly on transition. It is about moving into unfamiliar businesses at the cost of the one it is uniquely equipped to run. Domestic exploration and production are where ONGC is irreplaceable; everything else is built around that, not instead of it," Singh said.