New Delhi: Amid continued global energy market volatility, the Oil and Natural Gas Corporation (ONGC) has unveiled a robust cost-optimization and production enhancement strategy to strengthen efficiency, sustain profitability, and secure India’s energy future. The move comes as global oil prices are expected to stabilize in the range of $60–$65 per barrel over the next two to three years.
Speaking on ONGC’s strategic roadmap, Pankaj Kumar, Director (Production), ONGC, said that the corporation is well-prepared for a moderate oil price environment.
“Oil prices are anticipated to remain volatile, but we foresee a stable average range of $60–$70 per barrel in the near to medium term,” Kumar said. “We are preparing for a future where $60 per barrel is the new normal, focusing on operational and financial discipline to maintain profitability and growth.”
Navigating Price Volatility with Strategic Resilience
The global oil and gas (O&G) sector is witnessing uncertainty driven by peaking demand, expanding supply, and the ongoing energy transition. Over the past five years, crude prices have declined at a compound annual rate of 5%, underscoring the need for resilient business strategies.
ONGC’s leadership said that despite the price volatility, the corporation remains committed to sustaining production levels and improving operational margins through digital transformation, technological partnerships, and disciplined capital allocation.
“Volatile crude prices are creating major uncertainty for E&P companies. ONGC’s response is structured and strategic, ensuring both cost resilience and production growth,” the company stated.
15% Cost Reduction Target and ₹9,300-Crore Efficiency Plan
At the heart of ONGC’s new operational blueprint is an ambitious 15% cost-reduction target across its exploration and production (E&P) business over the next two years. The company currently operates at a production cost of around $45 per barrel, and plans to reduce this further through technological innovation, logistics optimization, and integrated project management.
A Dedicated Cost Council has been constituted to drive the initiative, focusing on both structural and process-level savings. So far, ONGC has identified over ₹5,000 crore worth of cost-saving initiatives already under implementation, and an additional ₹4,300 crore in value potential is under evaluation.
Key focus areas include:
- Offshore resource and fleet optimization
- Enhanced drilling and fuel efficiency
- Inventory and logistics cost reduction
- Route optimization and procurement reforms
“We are recalibrating our operations, investments, and efficiencies to thrive in a lower price environment,” Kumar said.
Stable CAPEX Outlook and Financial Strength
Despite global headwinds, ONGC has reaffirmed its commitment to maintaining capital expenditure (CAPEX) for FY26, ensuring continued progress in major E&P projects across its eastern and western offshore blocks.
“We are not planning to cut CAPEX for FY26. ONGC’s financials remain robust, and we have no immediate need to raise funds,” Kumar clarified. “We will approach the market only based on project developments and funding requirements.”
He added that ONGC is not seeking tax or fiscal relief from the government at present. “The government is already supporting the E&P sector in other ways. As of now, we have not sought any tax-related relief,” he said.
Major Projects and Global Collaborations
ONGC has intensified partnerships with global energy majors to drive field redevelopment and production enhancement.
Mumbai High Redevelopment (BP-TSP):
Under its Technical Support Program (TSP) with BP, ONGC aims to increase oil output by 44% (from 45.47 to 65.41 MMT) and gas output by 89% (from 70.40 to 112.63 BCM). This initiative alone is projected to unlock $15 billion in incremental revenue over the next decade.
KG-DWN-98/2 Field Revamp:
A collaboration with BP as Subject Matter Expert (SME) is underway to improve well design and completion practices. The project aims to add 12 million metric tonnes (MMT) of oil and 13 BCM of gas, supported by a capital investment of ₹13,000 crore across eight integrated sub-projects under the Combined Western Offshore Development Project (CWODP).
Pipavav Supply Base Expansion:
ONGC is scaling up its Pipavav Supply Base (PSB) to handle nearly two-thirds of its western offshore workload, potentially saving over ₹1,000 crore through improved logistics, reduced vessel turnaround times, and optimized sailing routes.
ONGC-BP Redevelopment (Phase I):
With a $400 million CAPEX commitment, this redevelopment aims to enhance recovery rates from mature fields, backed by digital integration and advanced reservoir modeling.
Production Revival and Output Growth
After years of declining production, ONGC has reversed its downward trend. Crude output grew by 1% year-on-year in FY25, with continued positive momentum in FY26—0.3% and 0.5% growth in Q1 and Q2 respectively over the same period last year.
This rebound is attributed to new well interventions, digital field monitoring, and enhanced subsurface mapping. The company plans to drill 100 new wells under Mumbai High Redevelopment Phases II and III by FY29, while accelerating exploration in new reservoir zones.
Digital Transformation and Data-Driven Operations
In collaboration with BP’s High-Performance Computing (HPC) center in Houston, ONGC is digitizing field operations and subsurface analytics using 3D-4C Ocean Bottom Node (OBN) seismic data and AI-based predictive modeling.
Workshops with data analytics firm Palantir have been organized to strengthen ONGC’s data integration, performance monitoring, and well design practices.
The company’s long-term digital roadmap aims to reduce project timelines, optimize well productivity, and unlock new reserves through smarter data utilization.
Plans for a Crude Trading Platform
Looking ahead, ONGC plans to expand into energy trading by establishing a crude trading platform by FY27. The initiative—potentially in collaboration with HPCL, MRPL, and ONGC Videsh Ltd (OVL)—is designed to integrate the group’s crude sourcing and sales functions for greater efficiency and global competitiveness.
“The proposed trading platform will help ONGC enhance flexibility, improve logistics coordination, and optimize returns across the value chain,” Kumar said.
The venture is expected to create a unified trading arm for ONGC Group companies, unlocking up to $1 billion in annual value through better crude marketing and supply chain efficiency.
Preparing for a $60-Per-Barrel Future
As global energy dynamics shift toward renewables and decarbonization, ONGC is aligning its operations to maintain resilience in a $60-per-barrel world. The company’s strategy focuses on sustainable growth, operational excellence, and long-term competitiveness, ensuring its continued role as a cornerstone of India’s energy security.
“Our focus is clear — operational excellence, cost competitiveness, and sustainable growth,” Kumar said. “ONGC is positioning itself to remain profitable and relevant in the evolving global energy ecosystem.”
Key Takeaways
- ONGC expects crude oil prices to stay in the $60–$65 per barrel range over the next 2–3 years.
- Aims for 15% reduction in E&P costs over the next two years.
- Identified ₹9,300 crore in cost-saving potential across 20+ initiatives.
- Maintains CAPEX for FY26 with no immediate fundraising plans.
- $400 million CAPEX committed for ONGC-BP Redevelopment (Phase I).
- Production up 1% in FY25; continued growth in FY26.
- Plans to launch a crude trading platform by next fiscal year.
Long-term focus on digitalization, production revival, and sustainability.
About ONGC
Oil and Natural Gas Corporation Limited (ONGC) is India’s premier oil and gas exploration and production company, operating under the Ministry of Petroleum and Natural Gas. As a public sector undertaking, ONGC plays a pivotal role in ensuring the country’s energy security. With operations spanning both onshore and offshore assets, the company continues to lead in exploration, development, and sustainable resource management across the country.
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