Just after the 329th Board meeting on 30 June 2020, ONGC CMD and Directors of ONGC and OVL met the journalists during a web-based media interaction. “While the COVID-19 disruptions during the end of fiscal 2020 has affected our bottom-line to around Rs 4900 crore, ONGC has maintained its physical performance of oil production at last year’s level, despite our main producing fields getting more matured,” informed CMD Mr Shashi Shanker, opening the interaction. The media event was participated by a number of senior journalists from the petroleum beat.
CMD and Directors interacting with media through web-based platform
After the opening remarks of CMD, a corporate presentation was made by Head Corporate Strategy Mr Rajarshi Gupta. The proactive efforts made by ONGC to maintain production even during the challenges thrown by the pandemic were presented. This included voluntary extension of duty by ONGC employees, crew change by chartered flights – Operation Nishtha, meetings conducted through web-based interactions, formation of OCAY Helpdesk, contribution in PM Cares fund, distribution of PPEs, groceries across the country, etc. It was also mentioned that the Prime Minister appreciated ONGC efforts and its employees’ salary donation. The presentation highlighted that ONGC first prioritized People, then Production, during the pandemic.
The recent pandemic added to the fall of crude oil prices to over 50 per cent, while gas prices also went down. The financials of the Q4 for ONGC also took a hit. Yet, ONGC has maintained the dividend payout to all its stakeholders.
The presentation featured that during FY20, ONGC has made 12 discoveries; 22 discoveries were monetized in the fiscal. ONGC has 15 more projects under execution, which includes 9 development and 6 infrastructural projects with investment of more than Rs 58,000 crore.
Despite several hurdles, ONGC maintained its domestic oil & gas production. ONGC Videsh now has 37 projects in 17 countries and witnessed highest ever production of 14.98 MMT in this fiscal.
The interactive session of the media interaction witnessed a number of queries from the senior petroleum beat journalists fielded by CMD, Director (Finance) Mr. Subhash Kumar and Director (Offshore) Mr Rajesh Kakkar.
Responding to a query on ONGC’s CAPEX plans for the next few years, Director (Finance) Mr. Subhash Kumar said that ONGC is assessing its resource position and impact of COVID-19 on project execution. He mentioned that even with resources, project execution has become challenging as the supply chains are affected by the pandemic. However, Director (Finance) asserted that ONGC does not intend to cut down any essential activity. “We have classified activities into three categories – Vital, Essential and Desirable. We will go ahead with our Vital activities, check the Essentials and we will try to take desirable activities up after some time,” said Director (Finance).
Responding to another query, Mr Subhash Kumar said that ONGC is committed to its long-term goals through its Strategy 2040; however amid the current downturn, the pandemic is forcing us to go for only agile project execution modes in our core business now. “We are learning to live with the current challenges. We will refocus on our Strategy 2040 in a few months. Under Strategy 2040, we have constituted 12-18 initiatives into five groups.” He asserted that ONGC and its group companies are doing well notwithstanding the crisis. “We are now focusing on sustenance. In another six months or so, we will again look at long term goals.”
Over a query on the possible increase in gas prices, CMD Mr Shashi Shanker added that at the national level, import of gas is around 50 per cent, while 80 per cent crude oil is imported. “To make domestic industry contribute to domestic self-sufficiency, remunerative prices are vital”, he added.
Director (Finance) explained that remunerative gas prices not only benefits the E&P producers but is also gives a major boost towards a gas-based economy by pushing investments for capacity building. “Increasing gas prices will also be good for the vision of Atmanirbhar Bharat,” he added. He also opined that the gas price should be market driven for balancing needs of all stakeholders. “Open price discovery through hubs, instead of allocation will be good for the economy.”
On ONGC’s plans to re-negotiate rig-hiring cost for ONGC benefit, CMD Mr Shanker said that a Committee is looking into it and the process is on; though specific numbers are yet to be reached.
On ONGC’s short and medium term outlook for crude oil prices and gas prices, Director (Finance) Mr Subhash Kumar asserted that the National Oil Company is quite stable in its outlook. “The Executive Committee considers $45 per barrel as the right price for decisions. We maintain that $45-55 per barrel will stay and the CAPEX plans based on that can be sustained comfortably.”
Over the Q4 losses of ONGC, Mr Subhash Kumar stated that apart from the impairment factor, the Foreign Exchange loss due to depreciating rupee also affected the bottom-line.
On a query based on the delayed production from 98/2 block, Director (Offshore) said that the critical equipment and supplies for the technology intensive project are being imported from the United Kingdom and France. “The COVID-19 pandemic has also played havoc there and the revised delivery dates are being worked out with the foreign vendors based there. So, there is some delay in the project. The first gas from the 98/2 block has flowed in early March 2020.