New Delhi: State-run Oil and Natural Gas Corp (ONGC) will stick to its investment plans even though the fall in international crude oil prices has put its margins under “severe pressure”.
ONGC proposes to invest Rs82,670 crore in five years to 31 March 2012 while its overseas subsidiary has planned an investment of another Rs58,674 crore.
The firm sells crude oil it produces at internationally traded price of oil.
“We should not feel happy that (international oil) prices have eased. Major investment plans are being put on hold, which is a very disturbing scenario,” ONGC Chairman and Managing Director R. S. Sharma told reporters here.
He, however, was quick to add that ONGC had not yet put on hold or deferred any of its planned investments including those in developing marginal oilfields whose economies is dependent on “good” oil prices.
“Today’s price is not comfortable as our margins are under severe pressure. $75 a barrel is a reasonable price for upstream companies to keep investing,” he said.
Sharma said the current lows in international oil prices are unlikely to sustain and prices would rebounce once recessionary fears in major economies subside. “I believe that the fundamentals do not dictate a two-digit crude oil price.”
“If the current level of prices continue for next 3-4 months, we will not have to put investments on hold, but if they stay at these level for longer, we will certainly have to review our plans,” he said.
Sharma’s views were echoed by petroleum secretary R S Pandey, who said the current oil prices lows may be a short-term phenomenon.