ONGC Plans .₹ 29k cr Capex for Oil & Gas Fields Next Fis­cal

State-run firm to meet its fund­ing needs through in­ter­nal re­sources

The Economic Times - - Companies: Pursuit Of Profit - San­jeev.Choud­hary @times­group.com

New Delhi: Oil and Nat­u­ral Gas Corp (ONGC) aims to spend ₹ 29,000 crore in FY1718, sim­i­lar to the capex planned for the cur­rent fis­cal, to mostly de­velop its off­shore oil and gas fields.

“Though the ex­pen­di­ture would be sim­i­lar to what we planned for this year, the phys­i­cal ac­tiv­ity would be more next year since the cost of ser­vices has fallen,” said a se­nior ONGC ex­ec­u­tive. The cost of rigs and many oil­field ser­vices have fallen by about 2530% in two years since the crude oil price slumped, ben­e­fit­ting ex­plor­ers and pro­duc­ers such as ONGC, he said.

The capex for the next fis­cal year does not in­clude the $1.2 bil­lion, or ₹ 8,000 crore, ONGC has to pay for the pur­chase of Gu­jarat State Pe­tro­leum Corp’s stake in the KG Basin as­set, the ex­ec­u­tive said. ONGC will meet its fund­ing re­quire­ment through in­ter­nal re­sources, he said. The com­pany is aim­ing to spend ₹ 29,300 crore in FY2016-17. In the first nine months, it has used up ₹ 19,000 crore, or about twothirds of its tar­get, which is at a slower pace than some of its peers that have al­ready ex­ceeded an­nual tar­gets.

In­dian oil com­pa­nies have been on a spend­ing spree this fis­cal year with all state oil firms mak­ing a com­bined in­vest­ment of ₹ 78,000 crore in three quar­ters, about 90% of their an­nual tar­get, on drilling new wells, build­ing pro­cess­ing plat­forms, ex­pand­ing re­fin­ing ca­pac­ity and fuel sup­ply net­works.

Most of the in­vest­ments planned for the next fis­cal year would go into off­shore projects off the West and the East coast, the ex­ec­u­tive said. Da­man, Bas­sein, Va­sai East and Gamji off the West coast, and Va­sishta and Nagyalanka off the east coast will gob­ble most funds.

HIGH SPEND­ING

A small in­vest­ment would also go into the devel­op­ment of KG-DWN-98/2, the deep­wa­ter block in the KG Basin, which will re­quire a large in­vest­ment in FY2018-19, the ex­ec­u­tive said.

Oil pro­duc­ers need to in­vest heav­ily to boost lo­cal crude out­put for a coun­try that im­ports 82% of its oil needs. The gov­ern­ment wants lo­cal crude oil out­put to rise sub­stan­tially so that im­ports can be cut to 67% by 2022.

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