State-run ONGC is effecting a four-pronged strategy to transform the domestic exploration and production (E&P) behemoth into an integrated energy solutions provider.
To make the CPSU “future ready” and align with India’s clean energy transition, ONGC has created the post of Director (Strategy & Corporate Affairs).
In an interaction with businessline, ONGC’s first Director (Strategy & Corporate Affairs), Arunangshu Sarkar said the E&P company is working on four pillars to diversify.
Predominantly an E&P firm, ONGC aims to evolve into an integrated energy solutions conglomerate with interests across E&P, oil-to-chemicals, renewables and natural gas (regasified LNG).
Rationale
“Energy transition is inevitable. But for how long it will take is a matter of concern,” said Sarkar.
In time, he explained, due to various factors such as carbon emission norms and renewables, the E&P earnings will be impacted.
“In due course of time when globally renewables expand the demand for fossil fuels will be less and a glut will be created due to excess supply leading to lower prices, globally and in India. In this, it will be difficult for our E&P business to survive. So, our first aim is to make E&P business robust through cost control, increasing efficiency and enhancing production,” he added.
A robust E&P business will form the base on which the country’s largest crude oil driller will chart its journey to expand into renewables, petrochemicals and RLNG, Sarkar said.
Diversification strategy
Number one is E&P business, and ONGC is making it more robust, said Sarkar adding that second pillar rests on renewables — solar energy, wind energy, battery storage systems (BSS) and green hydrogen.
“We are working in that direction aggressively. Our plan is to go for inorganic because we are not experts in this environment right now, so hand holding is required in initial stages,” he added.
On Wednesday, ONGC NTPC Green (ONGPL) said it will acquire Ayana Renewable Power (Ayana) for an enterprise value of ₹19,500 crore, or roughly $2.3 billion.
ONGC will also focus on oil-to-chemicals, which will form the third pillar. In August last year, government approved ONGC’s additional investment in ONGC Petro-additions (OPaL), which includes an equity investment of ₹10,501 crore. ONGC’s stake in its petrochemical subsidiary is now at 95.69 per cent.
Sarkar said that ONGC is now trying to bring OPAL out of the purview of Special Economic Zone which would exempt the company.
The fourth pillar is RLNG, regasified LNG.
“We are thinking of entering into that. It is a work in progress. We know the demand for gas is quite high in the Indian market now. Apart from our produced gas domestically, we will import and regasify it. At this moment it’s in a very nascent stage. We are waiting for the right time and right opportunity,” Sarkar added.