Speaking at an investor call, ONGC chairman and CEO Arun Kumar Singh said the company now produces and sells more gas than oil, with gas contributing higher earnings because of favourable pricing reforms and lower handling costs.
‘New well gas’ – production from newly drilled wells that receive pricing linked to 12 per cent of crude oil prices – accounted for roughly 20 per cent of gas volumes last year and is expected to rise to 25-30 per cent this year before climbing further over the next few years.
“At crude prices of around USD 90 a barrel, new well gas realises nearly USD 10.8 per million British thermal unit in the domestic market,” he said, adding that India was among the highest-paying gas markets globally for such production.
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The company said older gas fields priced at lower administered rates were gradually being replaced by higher-priced output from new wells, improving overall profitability.
ONGC expects gas production growth of 7-8 per cent annually, driven by projects including the Daman field development project, the DSF block and ramp-up at the KG-98/2 deepwater block.Singh said four wells under the Daman project had already been opened, with total gas production expected to rise progressively as additional wells come online.
ONGC, he said, was executing projects worth about Rs 33,000 crore in western offshore fields aimed at sustaining and increasing production. Western offshore assets account for around 60 per cent of ONGC’s oil production and 70 per cent of gas output.
It has recently expanded its partnership with BP plc for production enhancement projects across western offshore assets, after earlier assigning Mumbai High redevelopment work to the company.
Singh said production at the company’s KG-98/2 block in the Bay of Bengal had faced geological challenges but added that it now had “full handle” on the issues and expected output stabilisation measures to improve performance.
ONGC also highlighted improving prospects at its overseas unit, ONGC Videsh Ltd (OVL). The company said production from Russia’s Sakhalin project had recovered to near pre-Ukraine-war levels, while Mozambique LNG development was progressing rapidly, with first LNG targeted around 2028.
It also expects higher output from Venezuela operations under the current US administration, subject to licensing approvals.
Beyond hydrocarbons, ONGC said its renewable energy portfolio was nearing 3 gigawatts through acquisitions and ongoing expansion under ONGC Green Ltd.
The company is targeting an additional Rs 3,000-4,000 crore in cost savings after already achieving about Rs 4,000 crore in efficiencies under an internal optimisation programme.
ONGC also announced plans for a new port joint venture with the Gujarat Maritime Board to support logistics for petrochemicals and LPG operations, including its OPaL petrochemical business.
Singh said ONGC increasingly viewed itself as a “gas and oil company” rather than an “oil and gas company”, reflecting the strategic shift toward cleaner fuels and stronger domestic gas demand in India.
ONGC said gas production from key offshore projects is expected to rise steadily over the next two years as new wells are commissioned and infrastructure bottlenecks ease, even as some projects face delays linked to geopolitical disruptions and technical complexities.
On engaging BP as technical service provider for raising output from Mumbai High fields, Singh said oil production at the field was running at 102 per cent of target levels, while gas output was at 108-109 per cent of baseline projections.
Current production from KG-98/2 stands at around 2.3 mmscmd of gas and roughly 25,000 barrels of oil per day, he said, adding that output was expected to gradually recover over the next year as additional wells are drilled.
He, however, declined to provide specific production guidance for FY27 and FY28, citing the inherent uncertainty in exploration and production operations, but maintained that gas output would continue to grow.