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ONGC Aims to Reduce Oil Production Costs by 15% in Two Years Amid Crude Price Fluctuations

Strategic Insights

— 1 min read

State-run Oil and Natural Gas Corporation (ONGC) is preparing for a future with a $60/bbl crude price environment by curbing its oil production costs. As part of its strategic roadmap, ONGC aims to reduce its oil production costs by 15% in the next two years, with the expectation of saving around Rs 9,000 crore by 2026-27. The company has set up a dedicated cost council to achieve this goal and has undertaken several initiatives, including offshore resource optimisation, increasing drilling efficiency, and inventory reduction.

Key Takeaways:

  • ONGC aims to reduce its oil production costs by 15% in the next two years to save around Rs 9,000 crore by 2026-27.
  • The company expects to save Rs 4,000 crore in the current fiscal 2025-26.
  • ONGC has set up a dedicated cost council to achieve this goal and has undertaken several initiatives, including offshore resource optimisation, increasing drilling efficiency, and inventory reduction.
  • The company aims to increase fuel efficiency and has prepared a strategic roadmap to prepare itself for a future with a $60/bbl crude price environment.
  • ONGC expects a 44% increase in oil production to 65.41 million tonnes and a 89% increase in gas production to 112.63 billion cubic meters from its Mumbai High field in the next ten years.
  • The company has onboarded British oil major BP as technical service provider to improve production from the Mumbai High field, which is expected to unlock up to $15 billion incremental revenue in ten years.
  • ONGC has committed $400 million in capex for ONGC-BP redevelopment Phase 1 of the Mumbai High field.
  • The company has further split the MH field into 6 hubs for faster and optimised redevelopment.
  • ONGC is also exploring technical service providers for other important fields to boost production.

Statistics:

  • ONGC aims to save around Rs 9,000 crore by 2026-27.
  • The company expects to save Rs 4,000 crore in the current fiscal 2025-26.
  • ONGC expects a 44% increase in oil production to 65.41 million tonnes in the next ten years.
  • The company expects a 89% increase in gas production to 112.63 billion cubic meters from its Mumbai High field in the next ten years.
  • ONGC is expected to unlock up to $15 billion incremental revenue in ten years from the Mumbai High field redevelopment.

Sources:

  • State-run Oil and Natural Gas Corporation (ONGC)
  • Pankaj Kumar, Director Production
  • Global Data Point
  • SyndiGate Media Inc.

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