Chairman & CEO (CMD), Oil and Natural Gas Corporation Limited (ONGC)
Exclusive conversation with Arun kumar singh , Chairman And CEO of ONGC on Q4 results
क्यों मुनाफे से घाटे में आई #ONGC? ग्रोथ के लिए कहां ONGC का फोकस?
About Arun Singh
Arun Kumar Singh, Chairman and CEO of ONGC, stated in January 2025 that the company drilled a well based purely on AI predictions and achieved 98% accuracy, adding that AI investment is expected to significantly improve efficiency in oil exploration and development over the next 3-4 years. He also said that a new deal with BP could yield a 60% gain in recovery from a major reservoir. Singh has emphasized that India will require substantial fossil fuel use to sustain economic growth for the next 20-25 years, and that ONGC has a national responsibility to explore offshore and deepwater areas, committing to an annual capital expenditure of 35,000 crore rupees. In earlier remarks, Singh described the global push against fossil fuels at COP28 as "very hard" and noted that the energy transition presents challenges, including the need to socialize grid costs for renewable power. He stated that ONGC is committed to both oil and gas production and the energy transition, and that the company aims to bring as much gas as possible from its fields to land. Singh also said that India's energy demand will grow significantly over the next 10-20 years, and that ONGC will continue to explore and produce domestically.
Transcript (14 segments)
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Interviewer0:03
This quarter was slightly weak. What was the reason for the weak numbers? And more importantly, what is the company's outlook now? We had a meeting with the board of directors of ONGC, and with me now is the Chairman and CEO of ONGC, Arun Kumar Singh, joining the show. Sir, a very warm welcome. Thank you. First of all, thank you for coming to Mumbai for the results press conference. Your company is based in Delhi, but you consider Bombay important, that's a good thing. First, the numbers, sir. I would like to know why the numbers came in weaker than expectations, especially at a time when we can say there was a favorable situation for a company like yours. The numbers did not meet expectations this period. What are the reasons? And the exceptional loss of Rs 9,000 crore, why did it come, sir?
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Arun Singh0:53
So, a big issue that ONGC faced was the GST on royalty issue. Royalty is a tax, and tax on tax. ONGC believed that this tax on tax should not happen, but since the government, the GST authority and others were demanding it, ONGC was thinking that sooner or later this decision would come in our favor, but due to the matter taking time, and due to the accounting principle of conservatism, we took a bold decision that we should provide for our GST of about Rs 12,000 crore. So if you take out 25% tax on that Rs 12,000 crore, it becomes Rs 9,000 crore. So if we had not taken out this Rs 9,000 crore, our profit after tax would have been Rs 47,000 crore. And similarly, if you look at last year, the profit was Rs 40,000 crore, and there was a tax of Rs 8,000 crore due to a change in the regime. So compared to that Rs 32,000 crore, this is Rs 45,000 crore, so this is also 51% higher profit. But the optics issue is that you are asking this question: ONGC on its own, its profit in its own business increased from Rs 32,000 crore to Rs 47,000 crore, but you did well. We will come back to that. Factoring this, the numbers look as they are.
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Interviewer3:03
OK sir, realizations which are down 12% quarter-on-quarter, what are the reasons? And now since you know, this tax concern has gone back in history, how do you see this year packing up? What kind of performance improvement can we expect in operations?
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Arun Singh3:24
Last year, the gas price realization was around $7.3, but this year the government's policy is $6.5 per mmbtu, so there will be a drop of about $1. Crude price last year was very good, realization was $91-92, against today it is $75, so that is also around a 15% drop. So roughly we estimate that our revenue will be about 15% lower. But the incompletion to last year means income present to date, but quantities will be slightly higher and there will be some gain in taxation, so we always understand that no one's financial...
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Interviewer4:22
Sir, first tell us about the capital expenditure lineup for FY24. What will be the total amount, how much, and in which areas will it support? And on renewable, your focus is increasing now.
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Arun Singh4:40
If it is 10%, we will be more than happy, but from next year it will happen.
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Interviewer5:07
The OPEC meeting is on June 4th, and there is a sense that there could be a production cut. What is your view on that and what impact do you see? How do you see the company?
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Arun Singh5:23
In my opinion, I think OPEC will have to take a very responsible decision because the world is not like it used to be. And secondly, the world economy will be impacted if they make a responsible cut, and that impact will affect them too. And secondly, the acceleration of renewables will happen. That is like a mountain on one side. In my view, China's story is a bit different now, so demand is not as strong as the world was thinking. Very high responsibility, very extreme on both cases, so we have to take a middle path.
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Interviewer6:29
Sir, what is the timeline to start production from KG basin? And what are the prospects going forward?
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Arun Singh6:41
There are two scenarios. I will be very frank with you. Best scenario can be as early as August for oil production, and for gas, which is the main, October. So it is between August and October for oil production.
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Interviewer7:16
You are scouting opportunities abroad? Is there anything which is ready? Africa is a focus, and...
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Arun Singh7:25
For our economics, for our country's energy decisions, naturally we always look at opportunities. If it is commercially viable and the geopolitical situation permits, and if that country's political situation permits, we will be going forward with acquisitions. Could be in other places of interest. This is a normal exercise we keep doing. So whenever it seems to have come within striking distance, absolutely.
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Interviewer7:57
Absolutely, and a final question: In what way there?
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Arun Singh8:04
There I also told you earlier, it is a company with production of 12-13 million tonnes, whose share is short.