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Dear Shareholders,
It is my pleasure to present, on behalf of the Board of Directors of Oil & Natural
Gas Corporation Ltd. (ONGC / the Company), the Integrated Report for the financial year
2022-23 (FYRs.3), highlighting the Company's performance.
Over the past 3-4 years, the global economy has faced significant challenges. Growth
slowed down last year. Some major financial institutions collapsed. Intense geopolitical
tensions have disturbed the energy ecosystem.
Despite these challenges, India's sustained economic growth exemplifies its fundamental
resilience. The depth and width of transformation in India is truly remarkable. IEA
Chief Dr. Fatih Birol recently remarked, "India is at the ‘center of global
energy affairs' today". A growing young population and rapidly developing economy is
boosting demand in the world's third-largest energyconsuming nation.
The structure of global energy demand is also undergoing a rapid change. This is
catalyzed by climate-led challenges and emerging technologies. This transition is an
inevitable evolution that the energy sector must embrace. India's climate adaptation and
mitigation ambitions are profoundly transformative for our nation; it also carries immense
significance for the entire planet.
Amidst this mega transformation, the role of your Company, as the leading energy
explorer in the country, becomes even more central. Notwithstanding the uncertainty in the
oil and gas industry, we are continuously evolving and adapting to changed realities.
While we continue to remain focused on operational excellence as an immediate goal, we are
also building the ONGC of tomorrow that is resilient, agile and adaptable.
Recognizing the importance of Environmental, Social and Governance (ESG) aspects, we
have achieved substantial progress in reducing emissions. Integrating sustainable
practices into our operations have enabled us to lower our Scope-1 and Scope-2 emissions
by 17% in last five years. In FYRs.3, your Company has reduced its emissions by 2.66% to
8.89 MMTCO2e, from 9.14 MMTCO2e in FYRs.2. We have set goals to achieve Net-Zero emissions
for Scope-1 and Scope-2 by 2038.
Your Company is charting a roadmap for opportunities in renewable energy and low-carbon
sectors. It is planning to scale up its renewable portfolio to 10 GW by 2030. We are
committed to spend around Rs. trillion by the end of this decade, on our multiple green
initiatives. We are also actively exploring collaborations with leading players in the
energy space on various low carbon energy opportunities including renewables, green
hydrogen, green ammonia and other derivatives of green hydrogen
Energy Transition is a reality. However, cleaner fuels like natural gas will continue
to play an important role for balancing variable renewable energy at scale, while reducing
carbon emissions in the short term.
Petrochemicals demand is expected to remain strong and will continue to be a key driver
of oil and gas demand in the future. With this objective, ONGC is collaborating with other
entities to explore opportunities in the Oil to Chemical (O2C), refining, and
petrochemicals. We are also planning to set up two greenfield O2C plants in India.
In our core Exploration & Production (E&P) business, we have significantly
increased our efforts in the exploration and development of Indian sedimentary basins.
India's basins are underexplored and offer significant opportunities. Under our
‘Future Exploration Strategy', your Company
has set up an ambitious target to bring 500,000 sq. km of area under active exploration
by 2025. A total of 809 LKM of 2D and 13,696 SKM of 3D seismic has been acquired in
FYRs.3.
The Government of India has entrusted your Company to spearhead the efforts to expand
the exploration acreage. A total of 70,000 LKM of state- of-the-art 2D high-fidelity
broadband seismic data (API) was planned to be acquired in three sectors namely West
Coast, East Coast and Andaman offshore which was subsequently revised to 82,353 LKM.
During FYRs.3, a total of 65,271 LKM of 2D seismic data was acquired by us, which is 80%
of the revised target.
Your Company is also creating a commercial play in newer and frontier areas to
consolidate and realize reserves from unconventional reservoirs. We completed the drilling
of 4 HPHT wells, spread over KG Basin (2 wells) and Mumbai Offshore (2 wells) and another
3 wells with Basement Play as an objective - one each in Cambay Basin, Assam Shelf and
Mumbai Offshore. Of these, 3 wells bore hydrocarbons.
Over the past three years, pandemic and geopolitical crisis presented formidable
hurdles, disrupted global supply chains and also slowed down our project execution.
Despite the challenges, our flagship project KG-DWN-98/2 Cluster-II is progressing well.
‘U' Field of this project has been fully monetized and oil production from ‘M'
field shall commence in the current fiscal.
ONGC's iconic ‘Sagar Samrat' has been rededicated to the nation as Mobile Offshore
Production Unit. It is expected to increase ONGC's oil production by 6,000 barrels per day
over the next few years.
Hydrocarbon exploration is becoming increasingly challenging, with associated cost
expected to go up. Leveraging the latest technologies and equipment is crucial for
efficient operations. Your Company is upgrading itself to state-of-the-art level to stay
ahead.
For robust growth in future, we are focusing on three key areas: Deepwater exploration,
early monetization through faster project execution and enhancing production through
IOR/EOR techniques. We have continued our stable CAPEX program and invested over Rs.0,000
crore during FYRs.3. In this period, 5 major projects with an
investment of Rs.,118 crore were completed. During FYRs.3, five major projects have
been approved with total cost of around Rs.3,500 crore with envisaged life cycle gain of
27.64 MMTOE of oil and gas. As on 31 March 2023, twenty four major projects of over Rs.00
crore were under implementation with a total cost of around Rs.1,352 crore and envisaged
lifecycle gain of ~94 MMTOE.
Our standalone crude oil production for FYRs.3 was 19.584 MMT, while standalone gas
production was 20.628 BCM, as against 19.545 MMT and 20.907 BCM respectively in FYRs.2.
ONGC's overall oil and gas production, including joint ventures, stood at 42.836 MMTOE,
slightly lower than the previous fiscal year's 43.387 MMTOE. Additionally, our Value Added
Products (VAPs) production in FYRs.3 was 2.598 MMT, compared to 3.089 MMT in FYRs.2.
In terms of financial performance, your Company logged a gross revenue of Rs.,55,517
crore in FYRs.3 against Rs.,10,345 crore in FYRs.2, registering an increase of 41%. The
Company realized USD 91.90/ bbl for crude sold in the domestic market in FYRs.3, compared
to USD 76.62/bbl (FYRs.2).
During FYRs.3, we attained highest-ever standalone Profit before Tax (PBT) of Rs.0,395
crore against Rs.1,040 crore (FYRs.2) and Profit after Tax (PAT) of Rs.8,829 crore as
against Rs.0,306 crore (FYRs.2). The PAT would have been higher but we have made a
provision of Rs.2,107 crore during Q4 of FYRs.3 on account of disputed ST/GST on royalty
as a prudent accounting measure. However, the Company shall continue to contest such
disputed matters before various forums. At the group level, we achieved an impressive
revenue from operations of Rs.,84,829 crore and profit after tax of Rs.2,777 crore.
The total dividend for FYRs.3 would be 225% (Rs.1.25 per share of face value Rs.) with
total pay-out of Rs.4,153 crore and pay-out ratio of 36.45%, which is one of the best in
the industry. It is another testament of our sound business fundamentals, prudent capital
management and deep investor friendliness.
FYRs.3 witnessed impressive performance in our core E&P business, with positive
reserve replacement and significant discoveries. Your Company notified 8 new hydrocarbon
discoveries, including first prospect discovery ‘Amrit' in OALP Block MB-OSHP-2017/1
awarded under OALP-I bid round in Mumbai. Reserve accretion in terms of 2P
from ONGC-operated areas in India stood at 40.62 MMTOE.
Our Subsidiaries and Joint Ventures provide hedge against volatility in the energy
industry and give stability to the ONGC Group. On consolidated basis, ONGC Group delivered
a resilient performance in FY23, with 1,221 MMT of 2P reserves, 53 MMT of oil and gas
production and 36.23 MMT of refinery output.
ONGC Videsh Limited (OVL), the overseas arm of your Company, holds immense
significance, not only for the Company's long-term growth strategy but also for expanding
influence of sovereign energy diplomacy. Today, ONGC Videsh is present in 15 countries
across 32 projects of which 14 are producing properties. Some major highlights include a
notable increase in production in the CPO-5 Block in Colombia, reaching joint venture
production levels of 19,000 BOPD by the end of FYRs.3.
In FYRs.3, OVL production was impacted by several factors like force majeure in
Sakhalin-1 project, FPSO shutdown in BC-10 and heavy floods in GPOC, South Sudan. Despite
challenges, OVL delivered a healthy performance, producing 10.171 MMTOE vs 12.330 MMTOE in
FYRs.2. The production is expected to increase in the current fiscal year. Gross
consolidated revenue for FYRs.3 was Rs.1,676 crore (against Rs.7,322 crore during FYRs.2)
and the PAT (attributable to owners) was Rs.,700 crore during FYRs.3 as against Rs.,589
crore during FYRs.2.
HPCL, another Maharatna subsidiary of your Company, registered a stellar Y-o-Y growth,
posting highest-ever sales in all three major products - petrol, diesel and LPG. It
achieved highest-ever sales volume of 43.45 MMT compared to previous year's sales of 39.14
MMT. Refining throughput increased by 36.7% to 19.09 MMT in FYRs.3 from 13.97 MMT
(FYRs.2). Gross Refinery Margin (GRM) was USD 12.09/bbl against USD 7.19/bbl (FYRs.2). Due
to exceptionally high international oil prices along with suppressed marketing margins
during the year, HPCL recorded a loss of Rs.,974 crore. Revenue from operations was
Rs.,66,192 crore as compared to Rs.,73,897 crore.
MRPL remains one of the most operationally efficient refineries in the country, capable
to process a wide range of crude grades. MRPL showcased an impressive and sustained
performance with
standalone turnover of Rs.,24,736 crore (Rs.6,094 crore in FYRs.2) and recorded profit
of Rs.,638 crore during FYRs.3 versus profit of Rs.,955 crore (FYRs.2). Refining net
throughput of MRPL during FYRs.3 increased 13.8% to 17.14 MMT against 15.05 MMT during
FYRs.2. Gross Refinery Margin (GRM) for MRPL was USD 9.88 /bbl against USD 8.60/bbl
(FYRs.2).
Your Company places utmost importance on Health, Safety and Environment management
(HSE), ensuring the well-being of people and the environment. In May 2022, we launched
Project ‘Parivartan', to strengthen our safety culture and effectively pursue
strategic HSE goals, further emphasizing our commitment to a safe and sustainable
operating environment.
Our HR vision is to build and nurture world class human capital for leadership in
energy business. Employees are our most valuable resource for driving excellence. ONGC was
again recognized as one of the best employers in India among other nation-builders by
Great Place to Work (GPTW).
Dedication to the Nation goes beyond mere profitability and expansion. Through CSR
initiatives, your Company contributed for sustainable development of remote areas of the
country. In FYRs.3, we exceeded our CSR charter by spending Rs.76 crore with significant
focus on healthcare and education.
Your Company is committed to conduct its business in a legal, ethical and transparent
manner, observing the highest corporate governance standards. Corporate Governance Report
forms part of Annual Report and details out governance practices along with Certificate of
Compliance of Conditions of Corporate Governance.
While our operational and financial metrics
have been robust, we are committed to further strengthen them. We have recently
undertaken organization-wide initiatives to make our processes more agile, decentralized
and efficient. Your Company recognizes the key role of technology and digitalization as
enablers to become future- ready. We have initiated several business process improvement
initiatives in FYRs.3 including SCADA Upgrade Project and Common Analytics Platform.
ONGC's ICE and SAP systems were successfully upgraded and moved to SAP-S/4 HANA digital
platform.
I express my sincere gratitude to all our stakeholders for their invaluable
contributions to our Company's success. I acknowledge the significant role played by our
Board, customers, business partners, investors, regulators, and all others who have placed
their faith in us. I register my deepest admiration for our employees, who have
demonstrated unwavering dedication, resilience and fearlessness during these challenging
times.
I sincerely express my heartfelt gratitude to Government of India, especially our
administrative Ministry of Petroleum and Natural Gas for their invaluable strategic
guidance and steadfast support.
On behalf of our entire team, I thank you, all our shareholders, for their continued
guidance and support. I am sure that this lasting association will continue to gain
strength and remain an invaluable asset for years to come.
Jai Hind!
Sd/-
Arun Kumar Singh
Chairman & CEO