Given ONGC’s deep-sea exploration push, the scheme could take some burden off the company. (File photo)India’s largest oil and gas producer Oil and Natural Gas Corporation (ONGC) plans to invest about Rs 1 lakh crore over five years on exploration activities in deepwater and ultra-deepwater fields in India’s offshore basins, its chairman said Monday. Even as the state-owned energy giant remains focussed on its core upstream activities, it also plans to set up a crude oil and petroleum product trading unit in either Dubai or Singapore by the end of the year.According to ONGC Chairman and CEO Arun Kumar Singh, the upstream oil and gas major plans to drill 87 deepwater and ultra-deepwater wells till 2030-31, with the total investment required for this campaign estimated at about Rs 1 lakh crore. ONGC’s plans are consistent with the government’s push for boosting oil and gas exploration and production activities in Indian waters, for which it announced the Rs 84,000-crore ‘Samudra Manthan’ scheme, or the National Offshore Exploration Scheme, in July.The scheme will provide financial support for exploratory drilling in deepwater and ultra-deepwater areas and support building of common infrastructure for production of the discovered hydrocarbon, apart from funding offshore data acquisition and developing hydrocarbon manufacturing and services zones. The outlay is for implementation till financial year 2030-31.Given ONGC’s deep-sea exploration push, the scheme could take some burden off the company. ONGC plans to drill eight deepwater and ultra-deepwater wells in the current financial year, 10 in 2027-28, 20 in 2028-29, 22 in 2029-30, and 27 in 2030-31. The Centre expects the Samudra Manthan scheme to catalyse reserve accretion of over 600 million tonnes of oil and oil equivalent gas, while stimulating significant investments across the upstream oil and gas value chain.Also Read | For energy security, way forward is not public or private, but bothIndia is the world’s third-largest consumer of crude oil and also a major consumer of natural gas, but has a high degree of import dependency — over 88% for oil and about 50% in the case of natural gas. This makes the country’s economy vulnerable to global energy market volatility, and even poses supply risks, as has been witnessed during the ongoing West Asia crisis. Moreover, the country’s energy demand is on the rise, while domestic production is stagnant with numerous ageing fields witnessing natural production decline.Hydrocarbon exploration is a capital-intensive and long-gestation activity, with a typical period of five to 10 years from the award of an exploration block to the commencement of commercial production. Further, existing oil and gas fields witness a natural production decline of around 6–7% every year, making continuous exploration and new discoveries essential to sustain domestic hydrocarbon production, as per the government.ONGC’s trading unitThe company’s new trading unit is expected to begin operations either in Dubai or Singapore by the end of the year, Singh told reporters, adding that 95% of the work on the project is complete with only a few boxes left to be ticked. ONGC had announced last year that it was in talks with four international players to set up a joint venture for oil trading with one of them. ONGC is now in advanced stages of finalising the partner and the location of the venture, Singh said. ONGC wants the international partner to provide trading expertise.Story continues below this adAlso Read | Privatisation and petroleum: Let’s resurrect an old questionThe company expects this proposed trading JV to handle trade of up to 90 million tonnes per year to begin with, with $1 billion of annual profits within two-three years, sources indicated. Most of ONGC’s own oil and gas production is sold domestically on nomination basis, and its subsidiaries buy and sell around 70 million tonnes of crude oil per annum.These companies include its refining arms Hindustan Petroleum Corporation (HPCL) and Mangalore Refinery and Petrochemicals (MRPL), and its overseas investment arm ONGC Videsh (OVL). The proposed trading joint venture will bring all trading activities done by different companies in the ONGC group under one roof, which would help in bringing in efficiency and scale. The trading company will primarily buy crude oil for HPCL and MRPL, and trade oil and gas produced by OVL.Sukalp Sharma is a Deputy Associate Editor with The Indian Express and writes on a host of subjects and sectors, notably energy and aviation. He has over 16 years of experience in journalism with a body of work spanning areas like politics, development, equity markets, corporates, trade, and economic policy. He considers himself an above-average photographer, which goes well with his love for travel. ... Read More Tags:ONGC