ONGC Shifts Focus Toward Natural Gas-Led Growth

State-owned Oil and Natural Gas Corporation (ONGC) is increasingly becoming a gas-focused energy company. Chairman Arun Kumar Singh said natural gas has overtaken crude oil in the company's portfolio. He added that gas will remain the main driver of ONGC's future growth.

Speaking to analysts, Singh said ONGC should now be seen as a "gas-and-oil" company rather than an "oil-and-gas" producer. He said the shift reflects the growing role of natural gas in the company's business.

On 22 June, at 11:22 am, ONGC shares were trading at ₹246.60 on the National Stock Exchange.

Gas Output Overtakes Oil Production

According to Singh, natural gas production has already exceeded crude oil output and is expected to continue expanding in the coming years. He attributed this trend to strong domestic demand, supportive government policies, favourable pricing mechanisms and the development of new gas fields.

Singh said crude oil production is expected to remain largely flat unless major new discoveries are made. However, natural gas output is projected to grow steadily and will be the company's main growth driver.

Exploration Business Remains Core To Operations

ONGC's exploration and production (E&P) business contributes nearly two-thirds of the group's revenue. The company expects the segment's contribution to grow further as gas production continues to increase.

Singh also highlighted government measures such as lower royalty rates, market-linked pricing reforms and more. He said these initiatives have improved profitability for upstream energy companies.

New-Well Gas Production Expanding Rapidly

Production from newly drilled gas wells is growing quickly and currently contributes roughly one-fourth of ONGC's total gas output.

The company expects the share of new-well gas production to rise to 30–36% in the near term. Over time, it is expected to become the dominant source of gas output as production from mature fields declines.

Targeting 7–8% Annual Gas Production Growth

ONGC expects annual gas production to grow by approximately 7–8%, driven by several upcoming projects.

Key contributors include:

• Daman Upside Development Project (DUDP)

• Discovered Small Field (DSF) developments

• Offshore projects, including the 98/2 well cluster

Many of these projects are expected to begin production during the next financial year.

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Continued Investment In Exploration And Offshore Assets

The company drills nearly 500 wells every year, covering both exploratory and production activities. Singh said ONGC recorded a reserve replacement ratio of over 1.1 in FY26. This means the company added more reserves than it produced during the year.

To maintain and enhance output, ONGC is executing offshore projects worth approximately ₹33,000 crore. These investments are focused on improving recovery rates from mature assets, particularly those in the Western Offshore region, which remains the company's largest production area.

Source:

CNBC TV18