ONGC looks to cash in on gas pricing tweak, KG basin ramp-up

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Subscribe to enjoy similar stories. Oil and Natural Gas Corp. Ltd’s (ONGC) standalone gross crude oil realization fell about 8% year-on-year in the September quarter (Q2FY25) to $78.3 per barrel.

Yet, its Ebitda at ₹18,200 crore was broadly in line with analysts’ estimates. Windall tax was much lower year-on-year leading to improved net realization, thus boosting operating profit performance to that extent. However, consolidated Ebitda was down 26% year-on-year to about ₹21,800 crore due to lower refining margins at its subsidiaries—Hindustan Petroleum Corp.

Ltd (HPCL) and Mangalore Refinery and Petrochemicals Ltd (MRPL). While the company has managed to ramp up its production from the KG basin field, it has revised its overall production guidance downwards for FY25-27. It is well-known that ONGC has been struggling to restrain declining production from its fields, down about 20% over FY19-24.

The good news is that the ramp-up of crude oil production from the newly developed KG basin 98/2 block to 25,000 barrels per day (bpd) in October, up from 12,000 bpd in the June quarter should help it beat FY24 production figure. By FY25-end, production is estimated to reach 45,000 bpd, whereas gas production would increase to 10 mmscmd from 1.8 mmscmd currently. Besides, ONGC is also expected to gain from the government notification issued in August, allowing the company to charge higher prices for gas produced from new wells and additional production from old wells.