State-run Oil and Natural Gas Corporation (ONGC) is planning to curtail its oil production costs by 15% in the next two years as it expects crude oil prices to range between $60-$65 per barrel in the medium term.
The company is targeting to save around Rs 9,000 crore by 2026-27, Pankaj Kumar, Director Production said on Monday. Of this, the company expects to save Rs 4,000 crore in the current fiscal 2025-26.
ONGC has also set up a dedicated cost council to bring down its production costs by 15%. At present, the company’s cost of production of oil stands at around $45 per barrel.
To achieve the same, the company is undertaking a number of initiatives, it said, including offshore resource optimisation, increasing drilling efficiency, optimisation of logistics route, and inventory reduction. The company also aims to increase fuel efficiency.
The company has prepared a strategic roadmap to prepare itself for a future with $60/bbl crude price environment.
ONGC expects 44% increase in its oil production to 65.41 million tonnes and 89% increase in gas production to 112.63 billion cubic meters from its Mumbai High field in the next ten years. The company has onboarded British oil major BP as technical service provider to improve production from the Mumbai High field. This will unlock up to $15 billion incremental revenue in ten years, the company said.
It has committed $400 million in capex for ONGC-BP redevelopment Phase 1 of the Mumbai High field.
The company has further split the MH field into 6 hubs for faster and optimised redevelopment.
Further, in its planned MH Redevelopment Phase 2, the consortium is targeting 100 new wells for FY28 & FY29, Kumar said.
In addition, the company is also exploring technical service provider for other important fields to boost production.
In the KG 98/2 block, ONGC has engaged BP as Subject Matter Expert to diagnose root-case and identify well interventions to boost production.
The company’s Board has already approved a joint development scheme promising incremental 12 MMT of oil and 13.5 BCM of gas from KG 98/2 in the next few years.
It will also scale up operations at it Pipavav Supply Base, unlocking Rs1000 crore in savings.