ONGC reiterates commitment to overseas oil & gas properties to enhance energy security

New Delhi: India’s state-owned Oil and Natural Gas Corporation has reiterated its commitment to acquiring overseas oil and gas properties as part of a long-range strategy to enhance national energy security despite continued geopolitical uncertainty and economic turbulence in global markets.

Chairman and CEO Arun Kumar Singh on Friday, laid out the firm’s vision for focusing on fundamentals rather than short-term disturbances, reiterating that hydrocarbons will be at the core of the world’s energy equation for decades. “Oil and gas continue to underpin the global energy matrix.

Acquiring strategic foreign assets is not only a business imperative but a compulsion for securing India’s energy security,” Singh said. He recognised geopolitical tensions and protectionism as challenges but emphasised grit in ONGC’s strategy.

He added, “History teaches us that disruptions eventually stabilise. Our focus remains on assets that align with our long-term vision and are available at reasonable valuations. Short-term headwinds cannot derail our mission.”

Overseas strategy: Prioritising low-risk, high-value assets

ONGC’s overseas unit, ONGC Videsh, remains focused on developing or about-to-be-developing assets rather than high-risk greenfield exploration. “The globe is full of discovered but undeveloped reserves. For a company our size, these provide higher returns than speculation-exploration,” Singh explained, referring to the firm’s move towards this approach in the last decade.

The chairman also explained ONGC’s recent withdrawal from exploration blocks in Bangladesh on grounds of technical and commercial prudence.

“We have done seismic surveys and drilled a well, but the prospects were suboptimal. Without positive prospects, more investment was not justified,” he added, emphasising the company’s cautious approach to capital deployment.

Mumbai High: Unlocking billions in untapped potential

One of the major points of the ONGC chairman’s speech was the Mumbai High field, ONGC’s flagship offshore property, which has produced about 550 million tonnes of oil since its discovery.

But with a recovery rate plateauing at 30 per cent — well short of the industry standard of 45 per cent worldwide—the chairman spelt out ambitious plans to revive the veteran field.

“Increasing recovery to 45 per cent would release an extra 370 million tonnes, worth $180–200 billion. This alone could balance out countless operational and financial difficulties,” he clarified. Singh moderated optimism regarding swift progress, citing that hydrocarbon projects should not be rushed.

“In this industry, nothing is possible overnight. From identification of the problem to design of the solution, procurement, installation, and outcomes, even small projects take two years. Preliminary indications from continued studies are promising, but concrete results will emerge in stages—small successes in six months, significant breakthroughs in 18 months.”

Price outlook and operational realities

Singh anticipated strong oil and gas prices until 2025, with possible upward momentum in the fourth quarter. “Underinvestment in exploration and production will reduce supply, while demand keeps rising—particularly in developing economies. This gap will maintain price resilience,” he added.

Operational issues, especially in India’s eastern offshore fields, were also brought into focus. “The eastern offshore provides only a two-month yearly window for heavy infrastructure work, as opposed to the eight-month window in the western region. Skipping the January–February slot pushes projects by a whole year,” Singh illustrated, citing the importance of careful planning.

Navigating sanctions: Russia and Venezuela dividends

Rajarshi Gupta, ONGC Videsh’s Managing Director and CEO, spoke about financial intricacies associated with business in Russia and Venezuela. While Western sanctions have led to banking restrictions, ONGC still receives dividends from Russian assets, although some are stuck in local accounts.

“There is about $300–350 million (350–400 billion rubles) stuck in Russia because of banking channel limitations, but that is not a material issue considering the capital needs of our ongoing projects,” Gupta said.

In Venezuela, ONGC is looking for approvals to take more operational control and raise its share of crude.

“Most Indian refineries are not geared for Venezuela’s heavy crude, but once the sanctions are reduced, we hope for a smoother solution,” Gupta said, showing optimism over the long-term outlook.

Despite operational and geopolitical hurdles, Singh reiterated confidence in ONGC’s roadmap. “The potential is colossal, but discipline is paramount. Celebrating prematurely serves no one. Our real success will be achieving 45 per cent recovery at Mumbai High—only then can we claim a transformative win,” he concluded.

While the world energy markets undergo a transition phase, ONGC’s strategy represents a delicate balancing act: capitalising on short-term opportunities while grounding decisions in a multi-decadal perspective, keeping India’s energy security away from the uncertainties of a volatile world.