How ONGC plans to achieve ₹9,300 cr worth of cost savings by FY27

The cost reduction will account for approximately 15% of the planned operating and capital expenditure cost. ₹62,000 crore during the period, ONGC director (production) Pankaj Kumar told reporters on Monday.

The company formed a special cost council in the wake of falling oil prices and predictions that crude oil trading would be stagnant around $60 a barrel in the next two fiscals.

“ONGC has embarked on a strategic journey to prepare itself for a future with a $60/barrel crude oil price environment,” it was stated in his presentation. More than 20 initiatives are currently being implemented. ₹4,300 crore savings and the potential for other initiatives in the planning stage is approx. ₹5,000 crore, he said.

Optimization of offshore resources, increasing drilling, efficiency, logistics route optimization, reducing inventory and improving fuel efficiency are the state-owned company’s key cost reduction initiatives.

The company is expanding its logistics infrastructure at Pipavav port. “Pipavav Supply Base is being expanded with the ultimate goal of serving 2/3 of WO workload and unlocking savings of more than 1000 Cr,” the presentation said.

Production increase

UK-based BP will be the technical service provider to increase production at the Mumbai High field as a cost-saving measure. It was stated that BP aims to increase oil production by 44% and gas production by 89%, and this aims to increase revenues of $15 billion in 10 years.

Under the revitalization plan, ONGC and BP have divided Mumbai High School into six hubs for faster and optimized redevelopment. In the first phase, ONGC has already committed capital expenditure of $400 million. Under phase 2 of the redevelopment of the Mumbai High field, both companies have targeted 100 new wells in FY28 and FY29, according to the presentation.

Kumar said the company is also exploring technical service providers to increase production in other areas.

The company’s board of directors has approved a development plan that will produce 12 million mt of oil and 13.5 billion m3 of gas over the next few years.