How ONGC plans to achieve ₹9,300 cr worth of cost savings by FY27
The cost reduction would account for about 15% of the planned operational and capital expenditure cost of ₹62,000 crore during the period.
NEW DELHI : State-run Oil and Natural Gas Corp. aims to save a total of ₹9,300 crore by the financial year 2027 through a number of cost-optimization measures planned by the company.
The cost reduction would account for about 15% of the planned operational and capital expenditure cost of ₹62,000 crore during the period, Pankaj Kumar, director (production) at ONGC, told reporters on Monday.
The company has set up a dedicated cost council in the wake of subdued oil prices and a projection of crude trading tepid around $60 per barrel in the next two fiscals.
"ONGC has embarked on a strategic journey to prepare itself for a future with 60$/barrel crude-price environment," said its presentation. Currently, over 20 initiatives are under implementation with a potential of ₹4,300 crore of savings, and the potential of other initiatives in the planning stage is about ₹5,000 crore, it said.
Offshore resource optimization, increasing drilling, efficiency, logistics route optimization, inventory reduction and increasing fuel efficiency are the government-owned company’s key cost reduction initiatives.
The company is expanding its logistics infrastructure at the Pipavav port. "Pipavav Supply Base is being scaled up with end goal serving 2/3rd of WO workload, unlocking 1000+ Cr in savings," the presentation said.
Production boost
UK-headquartered BP will be the technical service provider to enhance production in the Mumbai High field as a cost-saving measure. It noted that BP aims to increase oil production by 44% and gas production by 89% leading to $15 billion of incremental revenue in 10 years.
Under the revival plan, ONGC and BP have split the Mumbai High into six hubs for faster, optimized redevelopment. In the first phase, ONGC has already committed $400 million in capital expenditure. According to the presentation, under phase 2 of the Mumbai High field redevelopment, both companies have targeted 100 new wells in FY28 and FY29.
The company is also exploring technical service providers to boost production in other fields, Kumar said.
The company’s board has approved a development scheme to produce 12 million metric tonnes of oil and 13.5 billion cubic metres of gas in the next few years.
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