Thank you, sir, Ladies and gentlemen we will now begin 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. The first question comes from Mr. Probal Sen from ICICI Securities. Please go ahead. Good afternoon Sir. Thank you for the opportunity. I had a couple of que stions. Firstly, as far as KG 98/2, you mentioned the oil production level of 33,000 to 34,000 going to 45,000 barrels of oil per day. Can I get a similar number for gas in terms of when has production officially started? What is it right now? And when do we expect to get , even as a range, when do we expect to get the 10 mmscmd target?
Oil & Natural Gas Corporation Limited earnings call
Just I want to share with you a little more. All wells are ready. All, piping are ready. All the gas flow lines are ready. Processing platform is ready. All we have to do is to install a living quarter. Unless living quarter comes because controls are there…that work got delayed for some reason . We are hopeful that it will get done because we are waiting for weather to improve, then it will get done. So I want to give you a ballpark number. Right now, we are producing roughly 2.75 mmscmd or so …we'll move to another level of 6 to 7 mmscmd once the platform gets done because then we'll open the process and all that. This is the minimum we'll begin with and then over some time depending on the maturation of field and reservoir condition we will reach our peak stated production of 10 mmscmd. So this is what the numbers look like.
So, sir, if I can try and summarize as per my understanding. Current 2.8 mmscmd will go to 6 -7 mmscmd, hopefully sometime in this financial year. And then maybe the production hit sometime next year as really everything goes well. Is that a fair assumption? Yes, that is certa in. But one thing I want to tell you, almost same number will come…5 mmscmd will start coming from January to March in Western Offshore from the new field for called DUDP. That is January to March.
January-March 2026.
Yeah. Yeah. Exactly. Financial year 2025 -26. This project is on dot. All the rigs are in place. Jacket has come. Drilling is going on. Four months we take to drill a well. Platform is already fabricated. We have to just mount on it. And then January to March, we'll start opening the wells one after another. So that 5 mmscmd is additional you can take in our kitty in last quarter. That is also a big number because 5 mmscmd roughly approximately 1.75 million ton.
Right and sir this 5 mmscmd …what will be the pricing of this, this will also be based on HPHT pricing or it should be new well pricing?
No. It is a new well pricing. KG basin is HPHT.
Yes, sir. Which is what I was clarifying, but this 5 mmscmd from Daman upside will be on new well prices. Right?
New well price.
Yeah. Right. So the second question, if I may, was around OPaL. Couple of things I wanted to clarify. The first was, in terms of the input requirement as of today, we are currently, if I'm not wrong, we are currently consuming a mix of naphtha and gas in a certain mix. Is that correct?
Exactly. The design is like that. It requires some naphtha and majority gas.
Is it possible to share the exact volume, sir? How much naphtha and how much gas are being consumed today? Currently, we are operating 60-40. 60% naphtha and 40% ethane.
And this we expect to move almost entirely to ethane. Once our ethane import facilities are done. Is that what we're trying to do?
Naphtha and ethane.
And this proportion will remain the same?
Same. Right now, ethane we are getting from Rich Gas. That will get replace d by U.S. gas.
Okay. Just last question on OPaL. When we say that moving away from SEZ we have added or will add about INR 700 crores to 800 crores, I believe is what you said, just wanted to understand exactly what changes, how does this benefit actually come about?
We conceived OP aL in 2006 based on the assumption that we'll export the product. We took at in SEZ zone. But in next 10 -15 years, what happened in the country is that country's own indigenous demand grew. So today, OP aL is 92% - 93% indigenous. So it was paying both the dut ies. When we are selling in domestic market, we were paying custom duty as well as exci se. So now custom duty is gone b ecause it is ou t of SEZ, so now from effective 4th April 8% to 9% saving is there in this way. So it is exactly what we told you. It depends on what happens in the petchem price because of import parity and all that. But given the fact that at one point in time, it was h overing around INR 850 to INR 900 crores. Now of course, the price has fallen, say, maybe INR 700 to INR 650 or so.
Appreciate the detailed answer sir. ..I will come back in the queue …thank you so much. Thank you. Participants are kindly requested to restrict with one question in the initial round. Dear participants, If you have any questions please press * and 1 on your telephone keypad. The next question comes from Mr.Bhaskar Chakraborty from Jefferies. Please go ahead. Thank you very much for the opportunity. It is very heartening to see daily crude production rising two quarters in a row. Could you share with us whether the trajectory is going to remain like this over FY 2026 and 2027? And what kind of production targets do you have on the crude side?
So month on month, of course, very difficult to say, but at least you know that we expect, some number to kick in from in this FY itself by the ye ar end from TSP initiative, some number. While all the numbers will come in '26 -27, '27-28, but some number we expect to kick -in by 25-'26 itself. We are hoping at least in '25 - 26, it should be around where BE oil is around 21.5 million ton. Basically this trend should continue because everything is stabilized now and you may be aware that surface facility in Western Offshore, we have improved as a part of our steps for not making system lose any ton. So pipelines, flaring, everything, everything, whatever we could have done, that is on course.
Understand it. And this DSF field, is there a timeline around which, that is going to come up by?
DSF is 2026 December, if I remember correctly. Because DSF is around 4.5 or 4 mmscmd. That work is going on ...all orderings done. Everything is getting fabricated. So once we have in January - March, we have both 98/2 upside and then Daman upside coming. And then after that, you know, 98 /2 additional production and 2025-26 end DSF block will come. So we're hoping that for 2-3 years, at least we have planned everything for production to remain up.
Like you said, for now, sir, would it be possible for you to share the gas number as well for FY '26? Gas number, '25 -26, we are hoping around 21 BCM, and then '26 -27, we are hoping around 22 BCM. So 5 -6% increase each year, year -on-year. Standalone, I'm talking about, yes.
Thank you very much sir and all the best.
Thank you.
The next question comes from Mr. Mayank Maheswari from Morgan Stanley. Please go ahead. So, my question was a bit more long-term question, which you kind of commented earlier in terms of trying to kind of grow your fleet yourself and invest in there. Can you just give us a bit of a view of how you're thinking about those investments for yourself? As well as on the cost side, you di d talk about a few areas of cost controls. Can you detail out there as well of what you are kind of doing incrementally for the next few years to kind of keep costs under control?
So cost side, some tailwind from market itself, because, rig rates, we at one point in time were taking at $90,000 a day that is now down to $35,000 a day. So you can infer your own numbers because we have around 30 such rigs in our western offshore. So co st side, we are very very bullish that whatever contract we sign, this contract, what we have signed is for three years. So if the same trend continues, it means our average rig cost ….out of INR 40,000 crore, INR 10,000 crore is our rig cost. So that is a major component. Second is our chopper movement, our vessel movement that is also around INR 6,000 to 7,000 crores. That we have organized in such a way that it has to travel less by opening a base in Gujarat. So that also is supposed to give us some good money. And, now, in fact, we have also couple of more internal measures like better manpower deployment, better growth opportunity and all that. So naturally, that side also we have done well and we'll contin ue to do well. So these 3-4 things could give us a good handle on cost. It has given half…we've almost achieved 50%. But 50% more we can achieve in this FY or next FY. Fleet, yes. Your question was about fleet. Fleet, I'll just say that …..you can imagine we have roughly 50 to 70 vessels, which we take from market. So as a matter of strategy, if you own the vessel , we'll be more profitable because there is a shortage of vessel in the world and we feel that we are paying more …. acquisition would be probab ly better model because somehow that market is not responding to new investment in some category of vessels. So that is opportunity we have before us. So that is what we are talking about.
And so just one more follow -up on the point yo u made that 20% of your volumes on gas right now and the new gas pricing. How do you see that kind of filter through in FY '26 and '27 now? This number could kind of go where?
Every year you should expect 15% to 20% of gas coming to NWG. So in 5-6 years’ time, everything will be NWG…new well gas.
Okay. Got it. So this year as well, so another 20 could come in this year and then another 20 next year. So two-thirds of your volumes should be there.
Yeah. Exactly. Because now it is getting accelerated because you might have seen in our annual result. We have drilled last year 578 wells, which is highest in the history of ONGC in last 35 years. So it is primarily attributed to two things. One, new well gas, because we have drilled more and more, because it's more and more attractive. And therefore, you would notice that we have arrested decline rate… normal decline rate of any gas field is not less than 6% to 7% a year. So we have compensated the full b y drilling new wells and it is very remunerative because prices are good. And in our country, gas prices are still, I'm saying that though we are getting it, but market today for a spot is still $13-14 per mmbtu. So sky is the limit as long as we keep, we don't lose product we don't lose production and keep producing. So second thing we have done very well is the exploratory wells. So in fact, we have drilled, high number of exploratory wells and we have drilled high number of new gas wells. So this is something that both are commercially very sound and also futuristic.
Thank you for providing very clear explanation.
The next question comes from Mr.Sabri Hazarika from Emkay Global. Please go ahead. Yes. Good afternoon, sir. So I have two questions. First one is, with respect to the policy scenario, the government has come up with a lot of reforms in the last few months, new rules as well as the act has been amended. So how do you see the scenario turning out in terms of like tie ups with global technology provider and also commercial agreement in some of the frontier, et cetera?
So two areas, one area you are aware that we have already signed TSP with one of the IOC for Western Offs hore, which is our crown jewel asset. There, in fact, reservoir is something that we were able to extract, but we want to extract better and faster. So this is something that has happened, Western offshore. Now second area which we are thinking of or we a re in the process to find out some sort of, in one field particularly, that is for Cluster 3. A lot of gas is there, but somehow it is not coming to surface. So gas not being there is not an issue. Gas is there that every time we drill and we find. So ther e we are seeking for some technology support within some form of partnership or something. And that, we are in discussion with some people and hopefully something should happen. Then that area we have not so far factored in our calculation because so far, we are only Cluster 2 and Cluster 1. Cluster 2, we are producing and Cluster 1, we'll shortly do something. But Cluster 3 is something that we are looking for some partnership to bring that gas to surface. So there is something there, technology challenge problem, because some would know and some would not. So there is something that we are looking for some partnership.
Got it, sir. Thank you so much. And just a small, specific question. I think it was mentioned in the opening remarks also. So regarding the dryw ell write off, so where exactly was it, and can we expect this run rate to continue or this could keep fluctuating?
No. What happens is that some year you get more dryw ells, some you get less drywells. So it is very difficult to predict that what will be next year, but this was a bad year in terms of more dry wells happen ed. But if we don't drill, then we don't get. You would notice that in out of every 7 to 8 wells globally, you have a discovery. So if we don't dril l, you don't get discovery and then you don't accrete reserves. Oil and gas companies, value comes out of reserve accretion. So one choice is to not drill and, you know, allow it to deteriorate. Second choice is to drill and accrete. More so for our countr y and our company, we need to explore more and more. It is investment into future, as simple as that, like you invest in share market, for long term share market.
Got it, sir. Thank you so much and all the best. Thank you. The next question comes from Mr. Varatharajan Sivasankaran from Antique limited. Please go ahead. Thank you very much for the opportunity sir. J ust focused on this new investment issue referred to. So in the light of all the recent plans you have laid down, what would be the CapEx guidance year-on-year and how much should we spend on each of them? What is the current thought process on that?
CapEx you mean E&P sector. Right?
No. Overall, obviously, we're looking at other areas as well ----. So going forward, how would we be looking at it?
So now with the services cost falling, that likely we are expecting some fall there. And if whatever group plans we have drawn, our CapEx should hover anything between INR 30,000 crore to INR 35,000 crore. So this is something that will include all. In fact, there will be some renewables with some E& P because you are aware that OP aL we are done with. So basically, E&P and renewable put together, we expect INR 30,000 to 35,000 max.
And how would other new businesses like LNG and shipping...
LNG doesn't require CapEx. Basically, unless we buy some asset abroad or some LNG terminal we buy. LNG is all you have to do is to do a long-term deal and, that's it and tell providers. It is an OpEx kind of model where you buy and sell.
Fair enough, sir. And, on the OVL front, you mentioned, Mozambique, any update on the other assets as well. Thank you. So I'll request MD OVL to answer this. Good afternoon. Thank you. As Chairman Sir has replied that Mozambique, we are doing very well. We see now the progress happening on a modular concept all over the world, for the equipment’s and other things to happen. The beach landing for the equipment’s to come in and start construction has also bee n completed. We expect force majeure to be removed anytime now and all the vendors are in place. So we are confident that by late '27, early '28, we should have commissioning of this LNG trains. On the other assets, our production in Russia is as normal a s ever and we have increased our production in Colombia, South Sudan and then also we have added our production in Azerbaijan. We are doing well in Lower Zakum, it's where the production is back to above 400,000. So on an operated joint operated project , ONGC Videsh production has increased by 9% last year. And so we see that there will be only the upsides as we go ahead. There are few other business development opportunities that we are pursuing as and when that happens and those fructify … will come back and inform the market as soon as it is done.
So if you have anything on Sakhalin as well as potentially Syria?
Let's come to Syria First. Syria, we had two projects. One was ASPC Syria where Shell was the Operator and we had one Block 24, where we were the Operator. Both were producing properties. Block 24 was under development. This recent development of the sanctions being lifted in Syria, we are trying to understand all the implications of that, how the things stand on the ground, how our partners will look at it going forward, but it's a good sign that if things come back to normal, it will only help us. On Sakhalin 1, let me reiterate that we got the approval of the Russian Federation in November 2023 to get 20% stake in the incorporated entity. The production has been going on as normal there -- it had come down to zero and it had picked up to 1 ,80,000 bopd. Now it's around 150,000 -160,000 barrels. There is an issue of our shares being issued from the registrar on our transfer of abandonment fund, which we hold here due to the banking channel restrictions. We are expecting that the requisite decrease for transferring those abandonment fund in rubles would come through soon. In parallel, as you are also hearing, we also hear that there is some discussion on the geopolitical scenario between the different stakeholders on how to resolve the Russia Ukraine conflict and we see only upside there also if the sanctions are lifted and other things happen, it will quickly then we can move ahead with that.
Thanks a lot sir. The next question comes from Mr. Gagan Dixit from Elara Securities. Please go ahead. Yeah...thanks for taking my question. Sir , just for the bookkeeping question, since December, I observed that you have changed the classification of the sales revenue in your release that I mean this crude oil this JV in the non-operated and operated JV and same for the gas, I think that you have done. But I think you have maintained the same production and sales volume as the earlier classification, I think. So it would be helpful if you can tell what is your operated JV revenue or at least the operated I mean, operated JV sales volume and production that's just for the apple-to-apple comparison actually? So, Gagan, actually, if you see, previously, we were providing the entire revenue that was basically one was for nomination, the other one was for JV, which included our KG 98/2 and other 100% operated JV. Okay. Now if you see the data which we have sent and which is there on our website also, there we have segregated our production figure as well as sale figure in line with whatever areas… wherever we put up any figure, whether it is a ministry site or whether it is our press release. So all the data are matching over there.
Okay. So that is also in the -----
Yeah. You can refer our site also for that purpose.
Okay. That’s from my side. Thanks.
Thank you sir. Dear participants, If you have any questions please press * and 1 on your telephone keypad. Participants are requested to restrict with one question in initial round. The next question comes from Mr.Hardik Solanki from ICICI Securities. Please go ahead. Yeah thanks for the opportunity. Sir, there has been a reinstatement in the JV volumes that we looked at. So may I know the reason for FY 2024, there's a reinstatement and there's a decline we see in FY 2025, right?
Vivek Tongaonakr
Restatement? Sorry, come back, Hardik.
So basically, if you look at the volume numbers, which are being given in JV, in the analyst file which you share. Right? So there is the JV volume -- the JV volume there, you know, has been reinstated for the FY '24, if you look at the oil production and the gas production, both.
Yes. So actually, I told you previously also what was happening when we were putting JV, the N ELP production was also part of it. And even our 100 % operated JVs were also part of it. Now we have put all those under the stand alone. So now whenever you see our stand-alone production, there you will find production which includes KG 98/2 and the non-operated JVs are only under the head JV currently.
So basically, it's only our share. Right?
Yeah. It's our share only.
Okay. So we reinstate, this year for FY '24 as well?
Yes. And secondly, on the OVL part, even in OVL, if you look at, there was some revenue reinstatement of the crude oil. There was a major jump in the oil revenue for OVL. So can you please throw some light on that?
Yes…. I think there was a reinstatement ----. We sell our Lower Zakum crude through our ONGBV subsidiary and we had taken it that as an agent they were selling the crude. But now we have considered it as a principal and booked it to the main revenue part.
That's helpful. And one more thing, from this year we also considered the OP aL, right?
Okay thank you. That's really helpful.
That would be the last question. Now I hand over the floor to Shri Vivek Tongaonkar for closing comments.
Yes. Thank you all. Thank you all for being present in our Analyst call. And on behalf of ONGC and on behalf of Chairman ONGC, I would like to wish all of you all the best, and thank you very much.
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 pleasant day.
Note
1. This document has been edited to improve readability 2. Blanks in this transcript represent inaudible or incomprehensible words.