Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press * and 1 on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing * and 1 again. I repeat. Ladies and gentlemen, if you have a ny questions, please press * and 1 on your telephone keypad . First question comes from Varatharajan Sivasankaran from Antique Stock Broking Limited. Please go ahead. Oil and Natural Gas Corporation Limited - 6 - 12.02.2024. Thanks for the opportunity, Sir, you mentioned about the production issue. If you can elaborate a little more on that. So, our understanding is that KG basin obviously is contributing to the oil increase this time around and will contribute to the gas increase next year . But subsequently, effectively in terms of compensating for the declining production in the other field, what would be the situation in FY26 or FY27 with regard to the developments in the new reserves which you have found over the last few years as well as any IOR/EOR activities? So, what is the kind of indication we can get in terms of a sustainable production both on oil and gas? With respect to your question about the future growth projections, with the start of first oil from the KG- 98/2 project and the upcoming program, we envisage that we will be ending this year on a similar number as we were having in the FY’23 or slightly better than that. But however, moving forward we hope to have an increase by around 15% in the next three years by FY 2026-27. And we have got a number of projects which are lined up. We have got something around 22 development/ infrastructure project with a CapEx outlay of around INR 60,000 crores, and those projects will also contribute to our growth trajectory. And secondly, as you know that we have got the old mature field where we have got around 6-7% decline. So, we are making the consistent efforts to maintain those productions and to reverse this declining trend. We have given a focus on few of the activities on the water injection prioritization, on the equipment availability, on the operational efficiency improvements, on the resource augmentation with respect to the drilling rigs, the vessels or the helicopters, and the induction of the state -of-art technology in the drilling rigs. So, these are the few measures which we are taking up on an aggressive bas is to arrest the decline from the old mature field. And secondly, we have got a number of development projects which are lined up, which will be contributing towards our growth trajectory.
Oil & Natural Gas Corporation Limited earnings call
Thank you, sir. My second question was on the 20% premium to the incremental gas production which Kirit committee has proposed. I understand it has still not been cleared and notified, but as and when it comes, what is the proportion of our APM production which will be eligible for this kind of premium pricing currently? And it can give some visibility as to how it can potentially increase over the next two to three years. Oil and Natural Gas Corporation Limited - 7 - 12.02.2024. Currently, as per the definitions of the gas premium pricing, any well intervention or the new well which is coming up in the existing nomination field will be eligible for this 20% gas premium pricing. Currently, during this year FY’2023-24, it is contributing something around 3-4% of our current gas production. And moving forward in the next three years, we hope that the contr ibution from this new gas towards the premium pricing will be in the tune of around 20%.
Thanks a lot.
Thank you. Next question comes from Amit Rustagi from UBS Securities. Please go ahead. Thank you. Sir, thanks for posting a great set of numbers. My question relates to KG basin field. Like, what is the CapEx we have incurred till date? What is our remaining CapEx in this field , and how are we going to see the cost of production both for oil and gas ? Will it increase our DD &A expense as well? So, if you can help us understanding these aspects. As you are aware, the total CapEx that we had planned for KG -98/2 was around $5 billion and the substantial part of which we have already spent . So, around 28,000 is the amount, the progress till date that we have incurred on that. There are some small cost escalations happening because of some change orders and things like that, but they are not very substantial. So , in terms of cost, we are com fortably placed as far as KG-98/2 is concerned. Coming to your second question was with respect to cost of production. The cost of production as you know is, basically the offshore is generally the cost is more, but it is a function of the production quantity that we get. So , the per unit cost is normally like depending totally on the quantum of production. So , considering that the current production that we are expecting from there, it is expected that it will be on a slightly higher side than the western offshore, but it will be the range which is expected for the offshore. Oil and Natural Gas Corporation Limited - 8 - 12.02.2024.
Can you give us a total cost like what is the FPSO cost per day so that we know what is the production and we can calculate on ourselves?
Yes, FPSO, the day rate is currently including GST , USD 7,18,000, that is the per day cost for FPSO. Apart from that as you know, we have the normal other operating costs like material consumption would be there. Then there could be some work over operations, the normal typical E&P industry costs which we incur for producing. So, those would be there. There could be some water injection costs as well. So, the overall cost picture will be clear once we start producing fully. I mean, the gas production is now we are expecting, as earlier Mr. Pavan was saying that in the first half of next year somewhere, maybe June, July. So, based on that, the cost will crystallize. But yes, the substantial part of the cost there for oil is the FPSO. The other facilities are yet to be in stalled over there. So , once it is installed, we'll have a clearer picture on that.
And sir, DD&A, yes.
I think the cost into FY25-26 when we'll be having the full-scale production for the field.
How you're going to appropriate the $5 billion cost over how many years, basically?
Yes. Normally the CapEx cost that we allocate is through by way of depletion. As well as the cost pertaining to FPSO is concerned it's like Ind AS 116 on the base of the lease. So, we have already started booking the depreciation and depreciation part through the lease part. So , you might have seen that there's some substantial increase in the depreciation in the current quarter as well due to the lease booking which you have already done for the FPSO. So, some part of the hit we have already started taking on that. Oil and Natural Gas Corporation Limited - 9 - 12.02.2024. So that would be a regular expenditure by way of booking through lease and the facilities that we are going to install that would be on the base of the reserve there, and reserve to production ratio. Normally, on average, around 10% is the reserve to production ratio. So, 10% annual, the expenditure that we incur on the CapEx is by way of depletion.
Okay, sir. Got it. And sir, I have a question r elating to the offshore rigs. Basically, we have around 40 offshore rigs. Could you give us , I think we were able to achieve a major cost saving program over 2021 when the rig rates were actually down. But now we have started to see rig rates moving up. So, how much of it is already being renegotiated and how much of it need to be renegotiated over the next one year? If you can give us some color on that.
See, relatively, we have a longer contract periods, normally in the range of three years. So, the total rigs that you're talking about, 40, is distributed over some of the costs which we had. The rates which we are currently having, they are continuing with the past contracts, and some of them are new. So, it's a mix of new and old. As of now, the rates which are going on. So, as far as the rig cost is concerned, whatever cost that is incurring, it's increasing on the base of the current contract raise, it's compensated by the contracts which we had already entered in the previous year. We don't have any system of renegotiating the rates as such. Normally, what we do is we enter into a new contract once the earlier contract expires. But yes, if there are opportunities where we can extend the current contract at a cheaper rate, that also we look into.
But what I'm trying to ask is that , if there is any increase in cost because of renegotiation in the last one year, because when you entered into contracts in 2021, they were substantially at a lower rate. But now I think the markets h ave moved up quite a bit on the rig side. So , what are the increase in rate we are experiencing right now in renegotiating the contracts? No, we don't renegotiate. But if you are asking that with respect to the new current contract that we are entering, what is the rate, and that is in the range of around. Just one second. Currently, the rates that we are getting on the new jack up rates that we are hiring is around in the range of $70,000 to $90,000 per Oil and Natural Gas Corporation Limited - 10 - 12.02.2024. day. That is the operating rate that we are getting. Yes, you know that during COVID period, it was around $45,000 to $50,000 around that. So that is the increase that is coming currently in the market. But we are expecting that based on the projections, the rates could cool down in future.
Okay, great sir. Thanks for answering my questions and best of luck. Thank you, sir.
Thank you. I request the participants to restrict with two questions in the initial round and join back the queue for more questions. Next question comes from Probal Sen from ICICI Securities. Please go ahead. Thank you very much for the opportunity, sir. I had one question with respect to the exploratory well write-offs. The Director sir mentioned that this was due to higher unsuccessful well write-offs in Mahanadi and the Western Offshore. I just wanted to understand does this change our assessment of reserves addition because I think Mahanadi development and the Western Offshore are two of the major development projects that we ha ve ongoing. So, do these unsuccessful wells impact our assessment of reserve addition from these projects?
Not exactly. Actually, unsuccessful wells are basically though we have discovered in the Western Offshore much in the past. We keep c ontinuing to go for further exploration there. So basically, as per the policy, like wells which we take up only for the purpose of investigation. Like expendable wells that we charge of irrespective of whether we have some fin d or not. You must have seen that recently we have had some fines in Mahanadi. So, the development of the field further does not have any relation as well as the dry wells that we are booking. Dry well booking is basically based on the accounting policy that we have respect to whethe r a particular well has been declared dry or whether that we are not going to use it anymore like an expendable well. So that's the basis on which we write off. It has nothing to do with the reserve that we accrete from the field. Reserves are totally base d on the findings and further investigation by the exploration group. Oil and Natural Gas Corporation Limited - 11 - 12.02.2024.
So, our assessment of whatever growth we assume or we have built into our MOUs or projections, they remain unchanged as of now from these two projects, right?
Okay. Sir, the second question is with respect to the projections. You did mention that you are aiming still to end the year at roughly flat oil production which would be somewhere around 16.9 million tons, if I am not mistaken, and that was the run rate in FY’23. I wanted to understand for FY25 what kind of exit rate should we actually be building it realistically? Assuming that oil production would be ramping up steadily from KG and some element of around six months of gas production should also be there. So , against the 16.9 million tons of oil and about I think 15.3 odd BCM that we should do in gas this year. What is the exit rate we should build in for FY25? If you can give any sense on that.
In the FY’24, as you may be knowing that earlier years we were facing a decline rates to the tune of around 4-5%. However, last year were able to manage it with around 0.5% decline . This year will be above that. We will be maintaining the numbers of the last year or slightly above that.
And now moving forward with this 98/2 because the FY’24-25, we will be getting the partial production. So, we will be getting the peak production for the partial year. So, in FY’24 and FY25, we hope to increase our current production by around 5-6%. And we will be getting the full plateau production from the 98/2 in FY26. Oil and Natural Gas Corporation Limited - 12 - 12.02.2024.
So, the 15% increment that we are talking about over the next three years essentially can be divided up into 5-6% increase pretty much every year that we expect over the next three years, correct?
That's right. In FY27, we are expecting us slightly a higher increase because by that time we will be getting another project of Daman Upside from there also we expect aro und 4 million cubic meter gas per day, equivalent to around 1.5 BCM. So, it will be 98/2 plus Daman Upside will be the two major projects which will be contributing towards around 14%, 15% production increase by FY27.
I apologize sir, I did not get the name of the other asset other than KG 98/2. What was the other asset?
That is a Daman Upside project.
That's on the western offshore.
Western offshore.
Daman, Daman Upside? Yes, Daman. Oil and Natural Gas Corporation Limited - 13 - 12.02.2024.
Okay. Sir, last question, if I may squeeze in . What is the kind of plateau period once the asset hits peak production of 10 MM SCMD and let's say somewhere around 40,000 barrels of oil per day from KG? What is the kind of plateau period that we are expecting for this production to sustain?
We envisage a plateau of around two years.
Plateau of two years and then a steady decline thereafter. Assuming no other well interventions happen.
The other project, other infill wells will be coming up, where the KG 98/2 cluster one will be adding up in FY28, so that will make up for the early decline.
Understood. Thank you very much, sir, for the detailed answer. I appreciate tha t. I'll come back if I have more questions. Thanks.
Thank you. Next question comes from Mayank Maheshwari from Morgan Stanley. Please go ahead. Thank you for the call, sir. There are two questions from my end. First was mo re related to capital allocation. Can you just talk a bit about of how are you thinking on a net cash standalone balance sheet? And I suppose you are seeing some improvement in terms of receivables on OVL as well as subsidiaries doing reasonably okay now. Anything on the dividend policy that you can talk about in terms of how you are thinking about DPS and growth in DPS with the volume growth that you are expecting? And if you can also talk on the same page Oil and Natural Gas Corporation Limited - 14 - 12.02.2024. on OVL and the collections on OVL in terms of iss ues you had in the past, how are that kind of panning out in Russia, Venezuela or Sudan? Thank you. So, I think first OVL we would like to answer your question. After that, the first question will be answered. Yes, regarding OVL, you have asked actually the position regarding Russia and Venezuela assets, what is the current situation. So, on the Russia we still have, due to the Singapore being an unfriendly jurisdiction, our dividends are still in hold up in Russia. However, we are at advanced stage of trying to pursue with the Rosneft to accept the ab andonment obligation upon OVL for getting back our 20% shares to be squared up in rubles. So , our application with the Russian authorities is expected to be heard very soon and we hope to close this transaction of meeting the abandonment obligations. Regarding Venezuela, you are aware that the sanctions have been lifted and they will remain open until say 18 April 2024. And we have received a kind of proposals from the PDVSA which are under negotiations and we are also exploring the banking route and trying to open up the bank accounts for easing up the fund flow remittance, inward and outward remittance from the country. So given that the situation continues to ease up, we hope that we will be able to secure our, we are seeking barrels from Venezuela for the dividend, outstanding dividends, and we hope to actually secure those rights to receive balance. Regarding other projects also, the outlook is positive and we hope to ga in positive positions in those projects also.
Mayank ji, now, I think first question will be answered by our CFO.
Yes. Your question was with respect to the dividend and the capital allocation. You know that we have been a consistent dividend-paying company over the last few years, we have been paying around 40%. So current year also, if you might have seen that we have already paid 9.75, it is almost 41% in this 9M period. Maybe in the last couple of years probably it was s lightly lesser. But yes, we have the plan to have that numbers continuing and being a good dividend-paying company. So that will continue. As far as the capital allocation is concerned given the current price and that we have comfortable price even after considering Oil and Natural Gas Corporation Limited - 15 - 12.02.2024. SAED and as earlier were saying that on the additional gas we are going to get a substantial higher price of almost 9-10 per MMBtu. So, with this we expect that we will have a good cash flow position going forward as well. So , whatever that we have, the normal CapEx that we have is around INR 30,000 crores annually for our normal E &P operation. So apart from that, the dividend that we are paying. So over and above that we have some surplus cash available which we going forward plan to slowly move out to venture into other areas as well apart from the conventional E&P. So, you might have already seen the announcement with respect to our investment in OPaL, green energy initiatives that we are taking. So , with all those things, we would be slowly moving ahead utilizing our future cash flows in those areas as well for the CapEx.
Sir, can you just give us a guidance on the CapEx for the next couple of years for fiscal 2025 and maybe beyond of how much you are thinking about allocating each year apart? Is that the same INR 30,000 crores that we can assume now going forward?
So, Mayank ji, what you can expect, it could rise in the current year in the range of INR 33,000 crores and next year it would be somewhere in the range of INR 33,000 crores to INR 35,000 crores. This I'm talking of the standalone CapEx. That's only for the standalone CapEx of ONGC.
Other than the integration projects, standalone CapEx.
Okay. And sir, can you just give it a bit of a holistic picture across the ONGC group of what kind of CapEx and the shift in capital allocation between upstream, downstream, midstream and renewables that you will have, roughly a big picture sense? It would be difficult for us to talk about the CapEx plans for the subsidiaries currently at this juncture. But as we said that as far as ONGC is concerned, the conventional investment of around normally INR 30,000 Oil and Natural Gas Corporation Limited - 16 - 12.02.2024. crores. So, INR 32,000 crores, INR 33,000 crores is the next two years as Prakash was saying now as far as ONGC is concerned. But the allocation for other investment , there are like the OVL we are planning to. I mean OVL is.
OVL, before this FM situation in Mozambique, were having a budget of INR 8,100 crores. After that the two-year budget was scaled down and current year BE is something around INR 3,300 crores. But with the resumption likely restart in the next year, we will have a budget of around $1 billion going back to, say, INR 9,000 crores on the OVL side. And that level of budget will continue for the next three to five years.
And as far as renewal and green energy is concerned, we have already announced that we would be planning to spend around INR 1 lakh crores by 2030. So that plan is there. But that's a relatively a longer- term plan. So, things are being worked out in nitty-gritty.
Fair enough. So, sir, just the last thing on this point on Mozambique, can you just help us understand the restructuring that you've announced and what are the implications in terms of earnings, taxes, et cetera, on the recent restructuring that you announced?
Restructuring of the operator organization, right?
That’s correct. Mozambique, yes.
Actually, you see that restructuring has got not much to do with the taxation . It has got, rather, actually, because Mozambique is a big size LNG project with a very high level of CapEx, which was actually announced at $15.421 billio n in June 2019. And this project development has been secured through Oil and Natural Gas Corporation Limited - 17 - 12.02.2024. project finance. So, the project finance was agreed for $16 billion. Now, to have that kind of debt on the partners or the partners books. Holdco model, AssetCo model has been evolved, under which the assets of the project and the debt will remain in the AssetCo and will not get transferred to the respective partners books. So that actually is the purpose for which the AssetCo model has been created. Because right now the project is like Indian consumption has 30% participation in the project of which OVL holds 16% and 10% OVRL. So, OVRL has assets of 10% and our associate BRML has assets of 6%. These will get transferred to the AssetCo model company, Moz LNG and the debt will also remain in that company only.
Got it, clear. Thank you, sir.
Thank you. Next question comes from Sabri Hazarika from Emkay Global. Please go ahead. Yes, good afternoon, sir. So, two questions. First one is, what is the current oil production in KG-98/2?
Currently, we are producing something of 12,000 barrels per day.
12,000 barrels?
Oil and Natural Gas Corporation Limited - 18 - 12.02.2024. And gas is around 1.75 million cubic meter per day.
Gas is around?
1.75.
1.75 MMSCMD is gas and 12,000 barrels per day is oil?
And you are selling it also or you are like storing it right now this oil 12,000 barrels per day?
Oil, we are in the process of making a tie up with MRPL for the first load of the tanker.
Okay. So, does it mean that, I mean, you have something like 4,50,000 barrels per day of oil. So, this 12,000 will add into there, right? I mean, it will be reflected in Q4 numbers whatever whenever they come, right? Q4 numbers will be reflecting this 12,000 barrels. Oil and Natural Gas Corporation Limited - 19 - 12.02.2024.
Okay, sir. And secondly, what was your 9M cumulative 98/2 gas production from 9M?
98/2 cumulative?
Gas production from 9M.
Okay. Sabri, we will come back to you. If you have something else go ahead with that.
Yes. Okay. I'll touch base with you pers onally, sir. So, second question is regarding your windfall tax. So now it's like largely established that the government is like government has allowed you around $75 of net realization. But given the fact that we are almost like one year down the line and next year your cost and all will also go up. So, have you gone to the Ministry or to the Government asking for an increase in this hurdle rate in order to take care of whatever cost escalation happens in the oil terrain. I know in gas, I think from FY26 onwards $0.25 is something which was given in the guidelines. But for oil, are you requesting the Government to look into this or have you got any indication or do you expect that the windfall hurdle rate will be increased from $75 from FY25 onwards?
Just one second. See, as far as SAED is concerned, it's Government policy. We have been pursuing the Government for reviewing this. But currently, it will be difficult for us to say exactly what will happen as far as SAED is Oil and Natural Gas Corporation Limited - 20 - 12.02.2024. concerned. But yes, we have been pursuing it with the government. But you might have seen that our cost figures also that way, like the way you are apprehending, it's not that costs are going to escalate very high. The OpEx numbers have been more or less steady as far as ONGC is concerned. So, we don't expect that the cost would be substantially higher that way. So , really the price that we are currently getting is also a comfortable price for us.
Okay. Any guidance on the cost side c an you give? Because if I look 9M 2023, so your total other expenditure was around INR 13,600 crores. So, 9M 2024 has been like INR 16,000 crores. So, it has actually increased. So FY25, do you expect it to be similar or you see it a normal increase, or can it increase higher given that rig rates and all are like higher?
One major reason that you find that the expenditure in totality has gone up compared to last year is because we started taking a hit on GST on royalty last year. A substanti al amount has been booked into INR 9,000 crores we took into previous years and INR 3,000 crores of last year. So , now the expenditure is around say INR 2,300 crores, INR 2,400 crores annually. That regularly now we have decided to take hit. Though we have been pursuing with the government. And we are very hopeful that the nine bench has been constituted at the Supreme Court. And we are still hoping that we'll have a favorable decision on that. So , in the past were just showing it as a deposit and were not taking a hit in the P&L which we started in the annual accounts last year. Apart from that, if you see the expenditure that we have, the cost escalation is coming through mainly for development purpose only. Like if we say, for example, in the offshore we have decided to spend money on water injection which will result into. We are expecting that from the existing mature field we'll have more production. So , those kinds of expenditure only. It is not like expenditure, w hich are in the nature of infructuous expenditure. Yes, as you said, drilling cost is one major component in the cost which in the current year it has gone up more. But we are expecting that the prices, for the rigs also, we are expecting that based on the projections, it will cool down.
Okay, sir. And just one small question. So, SAED is being imposed on 98/2 crude also? Oil and Natural Gas Corporation Limited - 21 - 12.02.2024.
Devendra Kumar
Right now we are getting it reviewed. This applicability of SAED and other taxes , is under review. Right now the preliminary view is that it may not be applicable, but it is not final. It is under review.
Okay, sir. Right now the rough -cut view is that SAED may not be imposed at all on 98/2 crude , that is 12,000 barrels per day. Okay. Okay, sir. Thank you so much and all the best.
Thank you.
Thank you. I request the participants to restrict with one question in the initial round and join back the queue for more questions. Next question comes from Gagan Dixit from Elara Capital. Please go ahead. Thanks for taking my question, sir. Sir, there is a news that ONGC planning to drill a well in the Andaman Basin from May. So, what I read in the earlier DGS reports that it has a potential of like 180 million ton or 1 billion barrel something. So, am I assumed this is something of a similar resource that you are targeting from the exploratory well from that basin?
It's the exploratory well under the OLP background, what we have got the block there and we are taking our first exploratory well in this calendar year. And the resource estimation from this well, we will be able to communicate later on.
Okay. Because I thought that might be you have some idea about based on your 2D, 3D surveys. So that's something minimum target that you are targeting of that. Oil and Natural Gas Corporation Limited - 22 - 12.02.2024. It's exploratory well, you know. So, let's hope and wait and watch that we get a good result from this well.
Okay, sir. My second question is that there's also the news that O NGC is in talks with restarting its production in the Libya that we exited 13 years back. So, any status of it, if you can point it out?
ONGC Videsh does not have any production asset in Libya. So, we don't have any option to produce from there.
Okay. That’s from my end, sir. Thank you.
Thank you. Next question comes from Vikash Jain from CLSA. Please go ahead. Hi, sir. Thanks for taking my questions. Firstly, sir, your OpEx is very -very high for this particular month. This particular 9M even after we adjust for your GST on royalty. For this particular quarter, it's at about , this 9M it's 25% up YoY, which comes on top of an 11% increase that we saw in FY’23, a full year. And this is even before Q4, which typically has been a pretty quarter where you typically have ended up booking large OpEx for the last five, six years. So, what exactly is happening? Because my worry is that in most cases, whether it is our oil realization or gas realization, the y are capped at a particular level. But if OpEx keeps rising and production anyways we've been struggling to grow it . How will profits kind of improve, if that is really the case? So, any particular reason why one can imagine that this 25% increase in 9M is a one-off? And secondly, Q4, will it again see a jump which typically it has seen in the last four or five years? Oil and Natural Gas Corporation Limited - 23 - 12.02.2024.
Yes, just a second Vikash Ji.
Yes. You were talking about the increase in OpEx over the 9M period, right?
That's correct.
Basically, if you have seen that in this quarter by Q3, the OpEx increase is only about INR 105 crores. We are more or less on the same level that we had for the last year. As far as 9M is concerned, the incre ase is mainly because during the COVID period, the operations were down and then we had some damages happened in offshore , which happened due to cyclone. So, one-off expenditure in terms of repair and maintenance. Almost INR 323 crores is on account of that. And then, as I s aid earlier to another question, now we are focusing more on water injection, which is more like a development expenditure, though we are booking that in the OpEx. So that's around INR 224 crores on water injection we are spending on the western offshore. So, these are one -off expenditure which are contributing. It's not that they are regular expenditure. In addition to that , on VAT Amnesty scheme also we have decided to go ahead with one case and where we are paying about INR 160 crores. Apart from that, some of the old blocks that we had were we exploratory blocks where there were certain claims with respect to LD and other things which we mutually decided to go through an eminent committee on the basis of the recommendation, we have decided to pay some a mount. So, most of the increase that has happened is in the nature of one-off expenditure. They are not a regular increase on the base of the production numbers. They are not directly variable with the production numbers.
Sorry. So, when you say like water injection, that would not be one-off, right? I mean, now you will account for it every quarter whenever that happens. Oil and Natural Gas Corporation Limited - 24 - 12.02.2024. No, w hat I'm saying is that once we pick up a field and we decided to go . See, water injection is not something which we incur on the base of the production every year. Certain fields where we feel that the need for water injection was there, we had been postponing it for some time in the past. And now in the current year, we have decided to go for it.
Okay. So, the last part that you mentioned around some provisions that you've thought of accounting . That has all increased the OpEx number for this particular quarter, how much is that total number? I mean, is there provision or whatever you said that you have or is that an ongoing thing that you have decided to charge every quarter from your own?
No, not in the nature of ongoing things which we decided . Earlier, we were having certain dispute with respect to completion of some of our exploratory schemes which we could not either for reasons beyond our control, things got delayed. So, the applicability with respect to LD and other things were in dispute. So, we decided to go for a dispute resolution mechanism. And we had constituted an internal committee of eminent experts who are mostly like eminent people from this industry. Through them we decided that, okay, let us close this. Similar to the VAT Amnesty scheme, which you are aware. So that's also one -time solution to mutually agre eable solution which we decided to go for. So , they are not in the nature of recurring expenditure. The numbers which I told is that with respect to this LD for nine plus was INR 136 crores and the VAT Amnesty scheme was around INR 180 crores, which we have booked in the current.
And sir, I mean, see, what I'm worried about is if you see a simple lifting cost has gone up for 9M versus $10 is about $12 or so, okay. And if we also look at our exploration write-offs, etc, and this is even before the Q4. Q4, typically over the five, six years has been a quarter where there's been very big charges which typically come in both in terms of exploration write-off as well as operating expenditure. So, is there any change that we may not see something like that in Q4 because even on an ongoing basis, OpEx has been higher through this 9M or that's something that this is the new OpEx number we should be working with? Oil and Natural Gas Corporation Limited - 25 - 12.02.2024. Yes, see, as I said, you talked about the lifting cost. In fact, precisely the water injection that we are doing is also forming part of the lifting cost. Whatever the water injection that we do in the reservoir, that is basically adding to my lifting cost. So again, that is one reason why the cost has increased. As far as th e exploratory write-off is concerned. In this particular quarter, we have taken a hit of about one well in Mahanadi River, which was an expendable well, that is almost INR 500 crores for one well. So , these are not the expenditure that we expect that will happen regularly, this kind of industry such things do happen. One-off expenditure once in a while do come largely, but we don't expect that the dry wells that we are going to be charged in the last quarter that you are asking me that we are not expecting it to be high.
Okay. Just one more thing. The new change in Mozambique in terms of the way the ownership has been structured. So, this will now allow us to book reserves as well. Because earlier, from what I remember, part of that 10% where 6% was owned by you and 4% by Oil India, that was in the form of an investment. So, reserves could not have been booked. So , that will change now, right? I mean, we'll be able to book reserves. Is that correct?
Yes, correct. 16%.
Sure. Thank you so much.
Thank you. Next question comes from Somaiah V from Avendus Spark. Please go ahead. Thanks for the opportunity, sir. In terms of the new projects that we have lined up besides KG basin, can you just give some color on next three years or so what are we expecting in terms of incremental production from these projects and what is the CapEx spend related to them? Oil and Natural Gas Corporation Limited - 26 - 12.02.2024. Incremental production from KG-98/2 or the total project what we are planning in the next three years?
Outside of, I mean, KG-98, the incremental projects that are coming online next two to three years. So , what is the production expected from them and what is the CapEx that we need to spend for?
The total CapEx, as I earlier said, that the ongoing project is valuing something about INR 60,000 crores which will be materializing in the next two to three years. And they will be having a lifecycle gain of around 80 million ton of oil equ ivalent. And moving forward in the next three years we will be expecting something around 5 million ton of oil and oil equivalent from these new projects of which the major chunk will be coming from 98/2 to the tune of around 4 MMtoe and around 1.5 MMtoe f rom Daman Upside. Then we have got the CBM project in Jharia and Bokaro which will be contributing around 0.5 MMtoe. We have got the S1 Vashishta which will be again contributing around 0.5 MMtoe. And we have got a few other projects of development of cont act areas under th e DSF-2 blocks are there. Then we have got Mumbai high redevelopment plan Phase V, which is upcoming. Daman Upside, I already told you. And there are various EOR projects which are upcoming in the onshore which will be again adding up to something around 0.3 to 0.4 MMtoe. So , these are the projects which we are looking forward to for completion in the next three years.
Got it, sir. So, one question on the CapEx. This INR 30,000 crores to INR 35,000 crores of run rate that we are mentioning. Can we just give some color on? You did mention that now in terms of new projects this is a INR 60,000 crores spend. Probably over a three-year time frame. So, what is the level of maintenance, exploration in new project spend if we can give a rough breakup in this INR 30,000-35,000 crores for the next two, three years? Oil and Natural Gas Corporation Limited - 27 - 12.02.2024. Broadly if you see that whatever our CapEx outlay is there, our development project contributes something around 60% of our total CapEx outlay in the development drilling as well as the capital project what we are taking on.
Yes. So, to be specific, basically if you see survey would be around 11%, and exploration drilling would be somewhere in the range of 22% and development drilling would be in the range of 25-27% and the balance would be on infrastructure and other capital which would be around 37%.
And, sir, also, any update on the OPaL equity infusion?
We have already drawn up a plan of infusing around INR 19,000 Crores of capital. The proposal has got approval of our Board and we have already submitted to the Government. But it is under active consideration at the Government level.
And the CapEx number that we are saying INR 30,000 -35,000 crores is a standalone level. It does not include any equity inflation.
That includes a normal equity, not the OPaL, what sir was talking about.
Understood, sir. Thank you. Oil and Natural Gas Corporation Limited - 28 - 12.02.2024.
Thank you. Next question come s from Manish Ostwal from Nirmal Bang. Please go ahead. I repeat, question comes from Manish Ostwal from Nirmal Bang. Please go ahead. There is no response, sir. Thank you, sir. There are no further questions. Now I hand over the floor to Mr. K. C. Ramesh, CFO, for closing comments.
Thank you. Thank you all for joining this call today. It has been a pleasure for us to take all your questions. As was said in the initial remark by our Director Finance, we are expecting that going forward in th is particular quarter itself, with the KG-98/2 commencing production. The production numbers that we have for last quarter of the last year we would be able to maintain in the last quarter current year, though for the first three quarters it's slightly on the lower side. But we are hoping that for better outlook and we are very confident about the future that whatever initiative that we are taking in terms of referring into other areas apart from the conventional oil industry, they would be paying us good d ividends. The investments have been well planned on well thought-out basis. So, with this, the price outlook for gas is also pretty good that we have already got based on the Kirit Parikh committee. We are expecting that the incremental production which is coming through gas would be fetching us almost $9-10 per MmBtu. So, gas would be adding substantially to our top line and bottom line as well. And with our persistence we will be trying to keep taking up with the Government with respect to the SAED applicability and take hopefully if we can get something positive on that as well. On the oil front also, we would be doing comfortably well. So , with controlling the cost is one area that we have been focusing now and we hope that we'll be able to identify certain areas where we can focus and reduce the cost as well. So, both on the cost and revenue front, we hope that we can substantially add to the bottom line. So, with that, we hope that in future from 98/2 adding and the Daman Upside which Mr. Pavan Agarwal was saying earlier, that is also going to come. So , the production numbers as well as the new initiatives that we are taking that will pay us dividends. We keep continue to pay good dividends which we have been doing in the past as well. And the current yea r, we have already given an indication of where we are in terms of paying dividends. So, with all this, the outlook looks quite good for us , and we hope you all will be there with us in this journey. Thank you. Thank you all. Thank you so much. Oil and Natural Gas Corporation Limited - 29 - 12.02.2024.
Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you and have a good day.
1. This document has been edited to improve readability 2. Blanks in this transcript represent inaudible or incomprehensible words.