ONGC considers foraying into regasified LNG biz as demand for natural gas rises

In an interview, Sarkar said that the plans are at a nascent stage and yet to take a concrete shape. He said that the public sector exploration and production major’s diversification is based on four pillars—efficient exploration and production, renewable energy, petrochemicals and regasified LNG.

Noting that R-LNG is one of the key pillars for the company’s diversification process, Sarkar said: “We are also thinking of entering into that. We have not yet entered,… it’s a work in progress in that, because we know the demand for gas is quite high in the Indian market now. We have the policy decision that gas percentage in energy is increased to 15% by 2030. We are working in that.”

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He said that apart from supplying the gas it produces in India, the company would supply imported gas. In terms of infrastructure for supplying the regasified LNG, he said that the company would initially look at hiring infrastructure such as LNG station and pipelines and in due course may look for investments in such infrastructure.

“We are thinking that initially, we will hire infrastructure, give charges to some other player, gradually in due course of time we may take participating interest in other infrastructure,” he said.

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There has been a major policy focus on LNG amid India’s energy transition journey as it is considered to be a cleaner fuel compared to crude oil. The government aims increase the share of natural gas in the country’s energy basket from 7% currently to 15% by 2030. Global LNG supplies are also expected to see a boost with new production capacities coming online in the US and Qatar by 2028.

Sarkar, however, noted that the company would go ahead with its R-LNG only when prices of the commodity ease. “We are waiting for the right time and right opportunity,” he said.

Major players in the R-LNG business include Petronet LNG, GAIL and Indian Oil Corp Ltd.

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‘Four pillars of diversification’

On the growth of its core business—exploration and production (E&P), Sarkar said: “We have now four pillars of diversification. One is that E&P system..making the E&P system robust. As a result of increasing efficiency and lowering cost in E&P business, we have increased the E&P production in December by almost 5%, month on month basis.”

“Our first aim is to make our E&P business very robust. Robust in the sense cost control, increasing of efficiency, mainly these two factors, and increasing production, these three, three things we must target, and we have already started doing that.”

Speaking on the growth in the renewable energy business, he said that the company would go for both organic and inorganic routes of growth, starting with the acquisitions.

“First, our plan is to go for inorganic. Because we are not expert in this environment (renewable energy) right now, so hand-holding is required in the initial stages, so inorganic. We have made a JV with NTPC, that (renewable energy) is the second pillar.”

He further said that the other pillar for the company’s diversification is the petrochemical business.

In August last year, the Centre approved ONGC’s additional investment in ONGC Petro-additions Ltd (OPaL), which includes an equity investment of ₹10,501 crore. This would increase ONGC’s stake in its petrochemical subsidiary to 95.69%.

Sarkar said that ONGC is now trying to bring OPAL out of the purview of Special Economic Zone.

Incorporated in 2006, OPaL has set up a mega petrochemical complex at Dahej, Gujarat, in PCPIR/SEZ (petroleum, chemicals and petrochemicals investment region/special economic zone). Currently, as it is under the ambit of the SEZ, and the company needs to pay customs duty for its sales within India, making the prices competitive in the market.