Good day, ladies and gentlemen. I'm Harteep Kapoor, the moderator of this call. Thank you for standing by, and welcome to Q1 FY 2022 Earnings Conference Call of ONGC Limited. For the duration of the presentation, all participants' lines will be in listen only mode. We will open the floor for Q and A post the presentation.
So without any further delay, I would like to now hand over the proceedings to our CMD, Mr. Subhash Kumar. Over to you, sir.
Good day to all. Thank you very much. Just before formally starting, let me give 2 pieces of information. One is that ONGC was established in 1956 on 14th August. So this happens to be our beginning of 66th year.
Secondly, I'm also very happy to announce that I have with In my room, in this very conference room, Director Offshore and Director Exploration, Shri Srivastava ji Doctor. Onshore, Mr. Anwar Sharma, our officers on special duty of ED Offshore, Mr. Palkaj Kumar and then we have Mr. Vivek Tanguankar, Mr.
CFO Mr. Anupam Agarwal, Mr. Rajeev Kumar, Mr. Lakshman Gora, Sanjay Bharati, Jagdish Prasad and of course, you know Mr. Prakash Joshi.
I have also with me Mr. Dickari from CMB office. So with that, we can start the proceedings of the day. So just to introduce, I am Subhash Kumar, CMD ONGC, quoting additional charge of CMD ONGC in addition to our Director financial of ONGC. And let me, on behalf of ONGC, welcome you all to this earnings call for Q1 FY 2022.
Thank you all for joining us on the call. So also on The call are my colleagues from Corporate Planning from Delhi, Mr. Akhil Verma, Mr. Rajarshi Gupta, Mr. Binod Halland and also my colleagues from ONGC, Mr.
Nirmal Kumar, our colleagues from P and B Mr. Chandrasekhar. So all of these are present here. ONGC has compiled its final results for the quarter ended 30 June, which has been reviewed by statutory auditors. The financial results have already been released on 13th August 2021, that's yesterday, through a press and sent to the stock exchanges.
These have also been sent to analysts who are there on our mailing list. Is a brief synopsis of the results. The company has earned a net profit that is profit after tax of INR 4335 crores During the Q1 of FY 2022 as against INR497 crore during the Q1 of FY 2021, An increase of INR3838 crores. That's in terms of percentage, this is an increase of around 7 72%. The increase in net profit during the current quarter versus the Same quarter of previous fiscal is on account of higher sales revenue due to higher crude and gas prices, which have been partly offset by lower natural gas prices.
The sales revenue for Q1 of this fiscal has increased by INR1021 crores. That's an increase of around 78%. And it is this fiscal at INR 22,900 and INR55 crores as against INR12,934 crores in the corresponding quarter of the previous year. The sales revenue in the current quarter has increased mainly on account of higher sales revenue from crude oil, that's around INR 10,013 crores and value added products have added INR 1263 crores, which is of course is partly offset, As I said earlier, by lower sales revenue from natural gas to the extent of INR 625 crore. And increase in GOI, Government of India share of profit petroleum per rupee is INR 6.30 crores, mainly in RGO and 90 by 1, that is by INR 4.90 crores.
The billing that is net of VAT and CSC for crude oil During the Q1 of current fiscal was at INR 65.59 per barrel as against U. S. Dollar. So pardon, it is US65.59 dollars per barrel against US28.87 dollars per barrel in the same period of the last year. This actually results translates into an increase of 127 percent.
And in dollar terms, this is an increase of $36.72 per barrel. The exchange rate of rupee versus dollar stood at INR 73.73 versus INR 75.86 in the Q1 of previous fiscal. Thus realization for crude in rupee terms stood at INR 4,836 per barrel in Q1 of this fiscal versus INR 2,190 per barrel in quarter 4 of FY 2021, which amounted to increase of INR 2,646 per barrel. That's an increase of INR 120 point 1. The figure of 2,190, which I mentioned actually pertains to Q1 of FY 'twenty one.
During Q1 FY 2022, the statutory levy stood at INR 5,970 crores as compared to INR INR 2981 crore in Q1 of FY 2021. That's an increase of INR 2989 crore. That's roughly doubling of the figures. The increase in royalty on crude oil by INR INR 1486 crores and SACHSY INR 1620 crores is mainly attributable to increase in appraisal price of crude oil from INR 16,373 per MT in Q1 of FY 2021 to INR $36,253 per metric tonne in Q1 of this fiscal. Similarly, there has been a decrease in royalty on natural gas by INR 34th Road on account of decrease in average selling price of natural gas from INR 7,230 3, 4000 cubic meter of gas in Q1 of previous fiscal to INR 5,900 1,000 cubic meters in Q1 of this fiscal.
The operating expenditure has increased by INR INR 642.40 crores, that's an increase of 15.4 percent from INR 4,100 IN Q1 FY 2021 to INR 4,798 crore in Q1 of this fiscal. The increase in this fiscal the Q1 of this fiscal is mainly attributable to the increase in consumption of materials, which happened mainly at the Dehesh plant by INR 3.25 crores on account of increase in quantity and prices of spot LNG. Contractual payment that is INR 127 crores mainly at Western Onshore and Offshore due to increase in activities, transport expense INR83 crores mainly at Western Offshore and staff expenditure by INR INR232 crore. This increase in operating expenditure has been partly offset by decrease in repair and maintenance by INR74 crore, mainly at Western Offshore Platform and reduction of other production expenditure by INR102 crore. The finance cost has increased marginally by INR10 crores from INR 6 INR10 in Q1 of previous fiscal INR26 20 crores in Q1 of FY 2022.
This increase is mainly on part of interest on NCDs, which has been partly offset by decrease in short term loan. There's a marginal increase of INR 24 crores in exploration costs written off, survey and unsuccessful well cost in Q1 of this fiscal, That is INR 11.27 crores in the quarter 1 of previous fiscal has increased to INR 11.51 crores in Q1 of this fiscal. This increase is mainly attributable to increase in successful well cost by INR 27 crore. DD and I cost for Q1 of this fiscal stood at INR 4,165 crores as against INR 3,822 crores on Q1 of previous fiscal. That's an increase of INR 343 crores and in percentage terms, it is about 9%.
The increase in DD and I cost It's mainly attributable to increase in depletion by INR 182 crores, depreciation by INR55 crores and impairment loss by INR106 crores. The increase in depletion is mainly at Western Offshore by INR124 crore due to increase in cost of oil and gas assets and facilities by INR INR 1360 crores, Ahmedabad Assets by INR 31 crores, Assam Assets 63 crores and RGO 90 by INR84 crores due to increase in production and cost of oil and gas assets and facilities. The increase has been partly offset by decrease in depletion at Vashista, PTY by rupees INR 47 crores due to booking of impairment loss last year and JB Rava by INR 45 crores due to increase in reserves and reduction in production. The increase in depreciation by INR55 crores from INR931 crores in Q1 of previous fiscal to INR986 crores
in Q1 of previous fiscal to
INR INR986 crores in Q1 of this fiscal is mainly attributable to increase in depreciation by INR 28 crores due to addition of INR 1433 crores worth of other plants and equipment and increase by INR 23 crores due to increase in depreciation on ROU assets. There's an exchange loss of INR INR 36 crores in Q1 of this fiscal as against exchange gain of INR 6 crores in Q1 of FY 2021. Corporate tax expense of INR 2,415 crores in Q1 of this fiscal has been provided as compared to INR 408 crores in Q1 of previous fiscal. The effective tax rate for Q1 FY 2022 is 35.78 percent as compared to 45.08 percent for Q1 of previous fiscal. The company at the consolidated level has earned a net profit that is profit after tax of INR 6,847 crores During the Q1 of FY 2022 as against INR1085 crores during the Q1 of previous fiscal, That's an increase of INR 5,762 crores.
And in percentage terms, this is roughly 531 percent increase. The increase can be mainly attributable to the addition from ONGC, our subsidiary OBL and reduced losses at MRPL and positive contribution from JV of OPAL. Let me also add here that for the 2nd successive quarter, Bhopal has been fact positive. Well friends, With this being the highlights, I finish my briefing of Q1 results of financial year 'twenty one, 'twenty two. We'll be very happy to take questions from you.
We'll suggest you to restrict your queries on financial results only. Thank you very much And we look for the questions.
Thank you so much, sir. With this, we will open the floor for Q and A interactive session. First question of the day, we have from Amit Rasogi from ABS Securities. Your line is unmuted. Please go ahead.
Yes. Sir, thank you for giving the opportunity. Sir, if you look at our gas output, that has declined both sequentially from the Q4 of FY 2021 and Q1 of FY 2021 as well and similarly oil output as well. So can we take this run rate as the now quarterly run rate to be analyzed for the coming years as well?
Okay. And Amit, any other questions? Will I look for the support for this particular answer your question in Satsby.
And sir, second question pertains to the gas prices. Now obviously, we are looking for an upward division from October 1. So do we have any like estimates where can oil prices go from October 1, 2021?
Okay. So I think I'll take the letter one, and I'll request my colleagues to answer production front by live give a generic answer. As far as gas prices is concerned, One is where we would wish to have them. That you know for certain is much higher than where we anticipate them to. But since they are regulated by a formula and formula is valid and current as on date and anybody since data is out Probably they are to be north of $2.80 per MMBtu.
So from that's a healthy increase compared to where we are today of around more than $1 per MMBtu. That's what we anticipate and this This is consistent with something I shared at the time of declaring our annual accounts where we anticipated that increase is going to be more than 50% to 60%. So that's on gas prices. I think as far as gas production is concerned, gas production in ONGC has been a victim of quite a few things. In fact, it has got affected Because of the constraints of COVID and there were to start with Constance, we you are as you have noticed, there is little bit of lack of pickup In actually the production, in fact, actual we had anticipated to produce 25.7 BCM in 2021, 2022, but we ended up producing a roughly 1 BCM less.
And the reason Beyond the constraints because of COVID actually was more to do with the uptick issues at the GAIN level. Next year, now frankly speaking, today, we do not have very clear visibility about the way COVID will go and secondly, about The timeline by when we will have the full production as anticipated from KG982 Because I am sure this is going to be one of the follow-up questions from either you or somebody. So KG982 since it is Its execution is affected by international supply chain remains badly affected. And to give you a sense, in different parts of the world, There are 5 contracts and as the luck would have been, the relevant markets from where Materials are being sourced at 5 different markets and somehow it has been seen that when COVID has come down and is under control in one part of the world. It has gone up substantially in another.
And today, if you look at Indonesia and Malaysia, where from Critical components for the project are to come. Actually those 2, 3 jurisdictions are very badly affected. So and it takes all to combine together to make a project. So there is no way even if it is possible perfectly Possible for somebody in Europe or Italy to supply the material. But if the rest of PCs don't get implemented, so I see it's an issue.
So that's an ongoing thing and as a result of it, while we had anticipated To produce 27 next fiscal, this from 24.7 27.3, I think we could end up somewhere in between. We might not reach 27.3 in entirety. And let me also remind, in 2021, what we produced was 22.81. 2021, 2022, despite the hiccups of pandemic, We did produce 24.79. So that was roughly an increase of 2 BCN, which should be considered substantial.
In addition to this, as my colleagues are just mentioning, actually Toktai in Western Offshore has also been a disturbance for production, While we were able to continue the production, both oil and gas are substantially the same level. However, there was some impact and that will also affect the numbers. So long answer to your short question. I thought let me address preempt some of the questions from you and your colleagues. I understand it's a Saturday.
So on your part also, there is a bit anxiety to have all answers upfront. Yes, sir. Thanks for that. Just a quick question on this. What was
the issue with Gail on the OpEx side? Could you explain that, if you can help me in
So whatever issue we had with Gail, Gail had with its customers. At the end of the day, quite a few local industries had to stopped operations. As a result of which the consumption stopped at the very lowest level and which actually combined together to make resulted and reduced off take by GAIL. That was not a deliberate action on part of GAIL.
Okay, sir. Got it. Yes. Okay, sir. Thanks a
lot, sir, and wish you all
the best. Thank you, sir.
Thank you. Thank you.
Next, we have Pinakin Pal from JPMorgan. Your line is unmuted. Please go ahead.
Thank you, sir. I have one question. If I look at the average realization of crude for the corporate at roughly $65.5 The discount to the average rent is slightly higher than what historically it has been. Any particular reason for that, sir?
So as you would know, actually, see, we have principally around 2 third production from Mumbai Offshore, This is benchmark to Boniolite. And then in Eastern Onshore actually the Oils are actually there is a very long list of oil which are used for the purpose of pricing. So while Brent is a right reference To look at how realizations have happened, the exact parallel needs to be drawn with the reference to Bonilite, Which actually affects our realization to a very large extent.
Understood, sir. And Fohr, just another question on the gas pricing. Mile, you did mention at this point of time given where the formula is, it looks at more than $1 increase in the next price reset in October. Given the lag that we have in the pricing formula and given where all the gas prices are globally, would you Expect even a larger increase in the next reset in April 2022?
I think, see, numbers for that are also partly available today. The trend suggests that it could end up being significantly higher. But since it's a numbers game, you can do it faster than me. And by all indications, actually, those numbers are likely to be
Thank you very much.
Thanks, Binaki for your question.
Next, we have Prabhu Sain from Centrum Broking. Your line is unmuted.
Thank you very much for the opportunity, sir.
Just a clarification on the first answer that you gave. The 24.7 BCM production, sir, was in FY 2021 and the FY 2022 target is 27 and you're saying it will end up being between 24.7 to 27.7. Is that correct?
Okay. Okay. Let me correct a little bit. Maybe I said that way. 22 point It one is what we actually produced in 2021 and 24.7 is something we intend to produce.
I only flipped by 1 year actually. That's
why I got confused. So 24.7, sir, is the FY 2022 target and FY 2022 Target was 27 and we are saying we will end up being somewhere slightly short of that, likely as of now.
Yes, yes. So Probably slip was attributable to better top the corona period. So you are anxious to better top it. Right. No, no.
Thanks for testing. I think that will be very helpful. Yes.
No problem, sir. The other question was, sir, with respect to the subsidiaries in the OVL production trends that you see. Now Any guidance you can give on Sakkalim and Vankar? What kind of decline rate should we work with for the next couple of years? Because it has obviously been a It's an older field as a gradual decline there.
So what should we be working with as a run rate, sir, for the next couple of years from OBL?
So, Praful, one is that Sakkalin started production in October 2005 And has been operating more or less at the same level. And then that's the impact too good to be true. There will always Certainly a time in the life of a field when decline despite the best of efforts cannot be contained. Having said that, actually it will be unfair to take year 2021 as any reference for the purpose of predicting what kind of behavior the fields are See, it's an extremely constrained environment in which the people are operating in field. Plus while Sakhalin project itself is not directly within the framework of OPEC and OPEC plus cut.
Actually, the overall intention to cut the production could end up being behind the thinking. And secondly, the oil prices were at ultra low at a point in time and whatever efforts Made by the project group at that level probably will be as a result during this period. The decrease in production has been sharp As far as Sakhalin is concerned previous year, but I'm sure that is not a reflection of the kind of decline which one can build in. Obviously, at one or the other point in time, the decline will settle.
And Vancor, sir?
Vancor, actually production has come down from 3.5 to 2.8. So and the Q1 also it is holding at around 0.69 MMPT, so which actually if one were to do a state calculation would also amount to around close to 3, So slightly less than 3 actually around 2.8 only. So today's with today's input that's the likely run rate. Bancorp is unlike Sakhalin is not at a stage where one can say that there is a natural decline needs to settle. So this could be attributable more to the supply chain issues rather than the field The aging of the field logic.
Okay. So one last Question, if I may, overall CapEx guidance broken up into segments if you have for 2022 and 2023?
Okay. So last year, if you remember, we have We started the year anticipating that we'll spend around INR 32,500 crores. Corona, when it onset in April, May, we thought we will be able to do only 26, but we ended up improving a bit on that. This year also we have this year we rather than building a specific number while for budget purpose we have a number which is very close to 32. Actually, we also have certain scenarios where we can ramp up the activity.
So the number will be again something like
32,
we have built 2 scenarios impact. The earlier figure which we worked out was INR 29,800 crores, but the actual budget we approved later on was INR 32 INR2500 crore. So number, if things improve, it much depends on the way things shape up from here. From effectively you can take it from 29,800 to 32,400. It's a question of the way The whole situation builds up.
So the whole COVID related supply constraints on KG, if they resolve, Then it will be at the higher end, sir. Otherwise, it might get stuck slightly low.
Is that
a fair way to look
at it? Yes, yes.
Okay. Thank you very much. I have more questions. I'll come back in the queue.
Next, we have Sabrina Hazarika from MK Global. Your line is unmuted.
Yes. Good morning, sir. Sir, I have 3 questions. The first one is related to OPAL performance. So Can you quantify in terms of the profitability and utilization for the Q1?
A word with 3, give me time to think.
Okay. Second one is regarding the 1st case, which was actually 90 8x2 bidding round. So what is the status of that?
And third one is relating to turnoff.
Can you repeat the second question?
There is some litigation From GMR and GBK regarding the 98 by 2 bidding down. So it was supposed to go to the
I'll request my colleague to address that question. Second one, As regarding the court case, the matter was heard once And it is still sub duties. So no conclusion has reached so far. So we are still pursuing it in the court. Okay.
As far as Upal is concerned, we had anticipated that FY 2021 will be an year with 100% capacity utilization. In fact, it did cross for a few months more than 100, but year end average ended up being close to 90%, 89.5% to which specific below or very close to 50%. This quarter also capacity utilization has been lower And while I don't have specific figures in front of me, I think it is around 87% or so. But happy to share that in both the quarters, actually the last quarter as well as the Q1, the company is in black. So I think last quarter of was around INR 270 crores or so and this quarter is INR 65 crores plus Net fact last quarter, Ketanathan?
Last year, sir. Last quarter, I think these were the
Sir, 274, sir.
Yes, 274. That's the Always quick with the numbers. Okay. Thank you.
2.74 for which period?
Q4 of previous fiscal.
Okay. That was Q74 and this quarter it was 65. Yes, yes. Okay, yes. And so the last question actually pertains to your CapEx more like your medium term CapEx.
Is the company trying to like change the CapEx mix in terms of looking some portion to I'd say renewable energy or something of that sort. I think there has been talks regarding plans, big sizable plans in, I think in farms and other kind of renewable sources. So are you planning to Let me look at the change effects on that side. Anything on that front?
Okay. So I can say actually 2 things on capital allocation outlook and plan going forward. One thing is probably we have now we have nearly concluded our internal discussions and decided that we will be little more aggressive on exploration and Instead of remaining constant to the 7 or 8 basins where oil has been encountered, probably we may take That's outside them for the reason that while risk will be higher, the reward The expected will also be higher. And for this, we have changed our approach and we are willing to build alliances with international majors To see that depending on the expertise and value they bring to specific scenarios, we can have them. So that is on the exploration front.
The second question pertain to Renewables, yes, you got it right. Actually, we have aspirations, numbers are we want to grow up to 10 gigawatt. So we are mindful of the transition in energy space taking place. However, we also are not in It's peering hurry to do that on tomorrow basis for the reason that since India continues to import a substantial portion of oil and gas which it consumed. So from marketing perspective or offtake perspective, there is no instantaneous challenge.
However, independent of that, In fact, Renewables seem to be making lot of business sense today. And we are looking at the possibility of inorganic investments in renewables Where with the alliances we could go into areas where beyond being passive investments They end up or they help us accrete value to the overall business scenario. So we instead of saying that we Moving away from actually fossil fuels, which seems to be the clamor in some of the cases elsewhere. Probably we will like to synthesize the 2 and build a stronger business context for ourselves by building in and improving the standing of renewables in our overall business profile.
Okay, good. Thank you so much and all the best.
And also to add that Something on renewables were to happen, actually no significant allocation is there in this INR 32,000 crores or INR 29,000 crores I mentioned. There's only marginal allocation today. Thanks a lot.
Next is Bharat Sanjan from Entyc Limited. Your line is unmuted, please.
Thank you, sir. So this OBL, Can you give us some idea as to under what conditions you can take a higher crude realization? Because last quarter, obviously, crude prices globally went up and realization has been largely flat. So under what condition we should look at a higher crude price and gas price realizations?
No, actually, if you know that in case of OBL, actually the crews are priced against the local benchmarks and local practices. So and for some I'm not sure actually the oil price realization of OBL would have improved definitely. That's One of the reasons for their improved performance, but improvement might not be that spectacular because All crudes not have have not moved in the same fashion. So however, their Q1 FY 2022, the realization is 65.59. So I don't exactly get the question actually.
Are you saying OBL realizations are lower?
Yes, it is not more in line with the global numbers.
No, 65, I mean compared to last year they realized in the Q1 28 and then now it is 65.
4Q as well, what has been the comparison?
Could you please repeat your question?
So last quarter vis a vis the previous quarter.
Okay. So immediately last quarter. Let me work out on that number. So I don't have that readily available. Maybe I'll request Prakash to pass it on to you.
No problem, sir. Thank you.
Okay. Yes, please go ahead.
Understood. Thank you.
Okay. Okay. Hello. So any more questions, please?
Yes, sir. Should I take the next question?
Yes, yes.
Okay. So next we have Vidya Dhar from ICICI Securities. Your line is unmuted.
Yes, thank you. Good afternoon to all.
My first question is regarding your gas production. So you I think you are suggesting that you will produce around 24.7 Bcm in the current year, while the run rate, if you take the Q1 and Assume the same run rate then it's actually going to be down y o y. So what is going to drive the rise in volumes from where we are in Q1 Closer to this 24.7 Bcm which we think we will do in FY 2022.
So a couple of things. One is that Q1 was affected by COVID. So COVID constraints have continued. And secondly, as I told was also talked which affected the production from Western Offshore. And so one is that in the period going forward, number 1, the production will normalize.
So that will be one uptick. And secondly, we anticipate that KG 90 eighttwo at least which are the two reasons we anticipate the numbers to go up. Now whether we'll reach 24.79 in totality on an bridge for the year that remains to be seen frankly speaking.
So but will you be up Y o Y at least Higher than last year?
Yes, yes, yes, yes.
And so and Are you already seeing a significant improvement in July August compared to last quarter?
So one is software related constraints are over And COVID impact is also reducing. So that's how July August things are building up. Okay. See, Tobit actually frankly speaking, while this question is to me, the answer is with you all. Actually, a lot depends on the way 3rd wave, if any, if it comes.
If it comes and is severe, then it may be very difficult to really get down back to these. But if it is okay and the way we have been lucky now that The cases have reduced, probably intensity has also reduced. So that may be a better scenario. Couple of more things actually which affected the production was also Higa plant shutdown, which was there for 16 days or so. Then there were certain issues relating to back pressure in 42 inches trunk line.
And there was some maintenance work on one process platform of Pana. So there were host of things. One thing effort we took up another or one thing triggered another. So there were 5, 6 minor regions which contributed to the bigger decline.
Okay. Now coming back to the Okay. G, if you could give us some color. So what is your current production of gas, which is entitled to this deepwater gas price? And how do you see that in the current year and next year?
And where is exactly in terms of
So let me ask my colleague OSD Offshore to answer this question. Yes, we are currently at total test price for 2 fields only that is one is Vashista as you are also mentioning And the other one is KG98x2 wherein we have some production. And put together, these 2 is in the range of 600,000 to 700,000 per day. And we expect to increase gas production from 98 by 2, but the second well is expected to come online maybe this month and or next month. And the 3rd well would depend on the weather condition prevailing over there.
We have a vessel over there to connect the 3rd well too. But again, the weather is picking up in the East Coast too. So these 2 are basically the field which are there getting the deepwater gas price.
So
if everything goes well then when do you see KG to be at 3 MSMD?
So 3 wells taken together, they are likely to produce slightly more than 3, which still means calendar year.
Q1 FY 2021. Okay. And what about the plan of further ramp up in Kishi? Where do we stand on that? So
in the quarter,
we are ramping up production from JG, oil and gas together We are planning to ramp up, say, by June 'twenty two from June 'twenty two onwards. But again, there are certain constraints as Our CMD has just mentioned, I mean, the COVID situations prevailing in Malaysia, prevailing in Indonesia and part of even Europe Where some critical equipment are being fabricated and in Malaysia and Indonesia where they are being consolidated and the fabrication of platform and the PSO is going on. So there in these two countries, there is severe restriction at the moment and in fact the labor deployment So and very frequently the yards are getting completely locked down because of some or other case coming up. So that may impact still, but still we have a plan to commence and ramp up rather, not commence ramp up production by June 2022. June 20, I mean for next fiscal we anticipate it to be close to 3 BCM.
Today whatever constants are talked about We are not I mean, we are keeping our fingers crossed in the sense that all these we are taking note Whatever developments are there in terms of challenge to our production profile, We are reaching a stage where these restrictions could affect the reproduction. Yet Today, strictly speaking, if everything was to be okay going forward basis, then it's not a problem. We could still get 3 in next fiscal,
And you do 3 weeks here next year. What about Vashishta? What is the outlook for Vashishta current year and next year?
Oil from KG is again June 2022 when we are thinking of Bringing FPSO on the screen. And as far as Vochista is concerned, Vochista well is now giving us around 0.3, 0.4 And the other way which we got to intervene, some kind of intervention is needed. That Still is maybe sometime in the
past next year, not before.
But if also there again, if everything goes well, what What should it be next year or is this going to be very small?
May not be very significant. The maximum with respect to the 98 by 2, it may not
But still significantly higher than where we are today on Vashish or no?
Say again?
It will be significantly higher than where Vachish is today, will it be 2, 3 and then essentially or we're not going even there?
As of now, we don't expect that kind of thing.
But currently, our some of our exploratory effort in the 98x2 have very recently shown positive results. Though we are still in the process of completing the existing drill wells And thereafter maybe we go for development of those positive aspects which we got and we
may get some good results there.
Okay. And so oil, if all goes well, what kind of production can we expect in FY 'twenty three, KG oil?
KG oil FY 'twenty three should be in
the range of 45,000 to 50,000 barrels per day?
Average for the year.
Average is 36,000. Average would be less because 36,000. 1.8 1,000,000 ton is what we anticipated.
So now just to confirm for FY 'twenty three, you said that Your production may be somewhere between 24.7 to 27.3. We've seen for the gas. That's what you said, Agil.
Yes, yes.
Yes, yes. Now on the what we're talking about Tying up with international oil majors. So just to clarify even there, you are basically saying in orally explore
or unexplored fields, you are likely
to buy a No, the fields you are likely to buy up with it, not in the commercial fields where already they're commercial is. So you're talking of tying up Mainly in those kind of the fields where you are unexplored or overly explored or in all kinds of basins?
So I think one is the technological based solutions we could look for any of the fields including where we are producing. But I think strategic alliances make sense even for those people. If we go to the new fields only, new area, new basins only because then what we expect is a discovery of a size and scale.
So it is more likely
so this
will be basically you will have there will be a partner in these acreages.
Yes.
Okay. Last question on OPAL. So OPAL, could you give us some numbers also on their interest cost and EBITDA in the current and the last quarter.
Just a minute. So EBITDA for Q1 'twenty one, 'twenty two, it is INR969 crores and EBITDA margin is 27% Compared to 1190 in Q4 of 2021, Well, actually margin was at 32.41%. So margins were really good in Q4 of 2021. And they were ultra low in Q1 of 2021. So that's fine.
As far as interest is concerned, 2021, which is a fair annual number, which is Payroll indication is up the order of around INR1700 crores.
And any number for the current year for current quarter?
1st quarter or what? EBITDA is 9.60.
No interest cost, interest cost. Interest cost is 4.58.
Okay. And is there some changes likely whereby the interest cost could come down significantly? And if that happens, when is it likely?
Well, we have planned, part of which was in news that we are thinking of increasing our stake. We have quite a bit of CCDs which are currently interest bearing would be converted into equity. So that would straight away result into reduction in interest of the order of around INR 600 crores. And More than that probably what we think that if ONGC were to be on the steering wheel, it would further reduce The interest cost on the rest of loans also by good 2, 3 percentage points.
Okay. Yes, just to squeeze in one more question on OBL, what is the profit petroleum number for last year and Q1 if you have that?
I think I'll request Prakash to share with you separately.
Okay. Thanks a lot, sir. Thank you very much.
Please have a nice day.
Next, we have Nitin Tiwari from Yes Securities. Your line is unmuted.
Hi, Suraj. Good afternoon, and thanks for giving me the opportunity. Suraj, my question is related to Western Offshore. You mentioned that Almost 2 third of the production coming from Western Offshore. So in relation to that, what is the kind of decline rate we are observing there?
And in terms of results, What are the number of years I mean, what is the estimate for results in terms of number of years of production, if you can just help me understand that?
Decline rate on an average in Western Offshore had been around 8% to 9%. And in reference to the scenario which through which we are going to raise our dividends As per the target given by Muzvi in adherence to action plan, So therein, if we look at the components from where those things are going to come from, So there are certain projects which are already under implementation. So one part is major part is that. And second one are Additionally, whatever the bottleneck was there in relation to line integrated and dispensing the infrastructure, pipeline replacement policy is also going on. So all this would contribute to the increase, and it could be in line with the numbers Which are there in the action plan.
And the numbers, if you want numbers, I don't remember right now with me,
And also I think notwithstanding the fact that individual field patients decline, We are able to bring enough of with the help of supplementary investment, we are able to not only contain it but increase it. So projections going forward. Yes. Just to supplement on the confidence note,
The Bombay High exploration during the 2021 has been very successful So we are on a positive note.
So if I have to basically in a nutshell understand the Son of So how do we like foresee production from the fields over there? Whether we see it in terms of Constant decline every year or shall we like to see it as more or less of stable production because there are few fields which are declining and there are few And new production coming in from
So it's likely to be more of the later as you suggested that we would have enough of investment supplementary investment to see that production is contained at existing level. Okay. I'm sorry, I'm
In the short term period, this will be like this and in a period of
So new projects will come, yes.
In the
year of 5 years. But in any case, on an overall basis, Despite what happens in oil and gas industry, we will be able not only to contain but only take it forward.
Right, sir. In terms of AG982, what is the peak production and what is the plateau period you are looking at?
98x2 peak production is of the order of somewhere in between 45,000 to 50,000 barrels of oil per day, Under plateau maybe around 3 years or so.
No, I'm talking about the number of gas production.
15,000,000, 14,500,000.
14,500,000. And for how many years, sir?
2 to 3 years, I think.
Right, sir. And sir, my next question is related to basically ESG activism. So globally, we are Observing that there's a lot of activism around adherence to ESG, non reduction of carbon emission and a lot of Oil business globally are facing like investor basically activism on this front. So have we also experienced anything of that sort And what are our plans in terms of basically adhering in order to adhere to reduction of carbon emission and So on and so forth. So if you can put some light on that, sir.
So, ESC is a very recent phenomena, but as far as ONGC is concerned, we We always face the problem that we will not spoil for plenty. In fact, gas plating, which is one of the major concerns globally. In 1992, with the help of World Bank, we brought in a project of gas clearing reduction project in Mumbai Offshore, Not necessarily dictated by the conversions of ESG at that point in time, but we wanted each molecule to generate revenue. Having said that, we are mindful of what is happening globally and we are working. One is that We have been very actively tracking our carbon footprint, which internally we have calculated and is reducing on year to year basis.
But just to enter the next stage of taking stock of baseline, We are intending to hire a consultant and do the study. But second thing I may add that ESG concerns are Exactly not same for every company even in the same sector because if you really look at when ONGC produces gas in India. It actually could end up in the kitchen of somebody And help replace the fire boat or core dunk. So the Impact of the same product in case of ONGC could be materially different from somebody who's doing it for purely commercial reasons and That's perfect. Notwithstanding that, we are doing a lot on carbon sequestration where we are going for CO2 EUR.
Then in terms of capturing the fugitive emissions On Waterfront also, we are quite mindful and calculating reducing our water footprint. Global Methane Initiatives we are very actively associated with. And we are also using micro turbines for the purpose of converting the small gas isolated gas into the electricity To run our projects instead of clearing them which had been the case earlier. So we are taking lot of efforts. We will have a much upgraded plan soon Where we will be able to tell you in more detail in near future.
Sure, sir. Thank you so much for taking my questions. Have a good day.
Okay. So I think we can have one more question.
Sure, sir. Next, we have Swapnil from Incred Capital. Your line is unmuted.
Yes. This is Abhil, Swapnil. Am I audible?
Yes, yes. Okay.
Two questions, sir. First is your latest presentation Gave not only the projections for 1 or 2 years, but say FY 25, in which you have talked about gas production going up in Q4 since the Q4 and oil production going through 'twenty seven. So notwithstanding whatever conversations we are having in terms of near term issues on COVID and stuff like that. If I may ask, currently how seriously should we be taking this longer term jump of something like 35 BCM for gas and 27 ounces.
Okay. So couple of things actually. See, our near term Plans are affected more by COVID over a period of time, one can figure out how to manage even if COVID continues. And in fact, we believe that COVID is not going to disappear in a way. Only maybe we would need to learn as to how to continue to operate along with this and probably manage it better.
So that is one thing. Secondly, I think very clearly what My colleague shared was that where we aspire to be. So we want to have 70% share in overall production, 65% to 70% And 65 is what we are planning. So for oil, the number is 40 as far as the 3 MOPNG has kind of adopted that, so 26 MMT. And very clearly, Let me share it here openly that our existing actually this also factors in what How much of YTF we need to have to achieve a figure of that kind.
So it's not necessarily coming out of all the discoveries or all the production we have as on date. It also has some contribution from YTF. And same is the case with the I think in oil front actually the Oil front, it is close to 1 MMT comes from that. And in case of gas also very similar, 1 Bcm To 2 BCM, in fact, 24, 25, 2.1 BCM comes out of that. And in oil, actually in year 24, 25, 1.5.
So with the kind of numbers we talked about, there is a gap and that gap we need to build from by TF, 1.5 in oil and roughly 2 or so 2.1 actually in 2 BCM in gas. So if you were to say confidence, relatively 100% confidence for the figure minus 2 As on this, but as we have seen the way we have historically converted, in fact the plan is only little more conservative than what we have done over a period of time.
Great. Thank you. Second question relates to, again, the comment that you made in terms of tie ups with global companies. I mean, Actually, even from a global framework, the fact that we have 100% stake in 2019 by 2 is probably an outlier in terms of not sharing risk with other players. But in terms of risk for strategy about trying to get more people on board to share the risk, what I'm trying to understand is how Constingent are the plans to sort of go aggressively on the expansion.
How are they sort of are they really dependent on getting these partners? I mean, I. E, If the crash environment continues to remain poor and nobody sort of willing to join you, would you still take those risks or would you sort of hold back a bit
No, sure. As far as these projects are concerned, we are going ahead irrespective of whether some partner comes or not. I think KJ982, if we are willing if we were to be willing to discuss about it, one of the reasons would be it would offer a size and Okay. Other discoveries or other projects which we are intended to take up in next 2 years are not of probably size and scale In which an international participant will be happily wanting to come along. So that's the reason.
Neither it is yes No, it's not black and white. It is actually we think that it does not fit in with the strategy of some of these big players. KG98 by 2 years, Both from technology perspective, it is a win win as well as it gives the size and scale and it is a project which is there for anybody to see and it's So rest of the discussions on with the international measures Our contingent upon being able to identify something of You know interest, now we know for certain some of the big names are interested in some specific place. The discussions are going on. We know that some of these entities are also curtailing their investments on upstream, But India also has a distinction of being a huge market and that could be an attraction for them to have a slice of this such a large market And that's a motivation for them.
And in the kind of basins as we keep on discussing, they have had tested successes in similar basins, analogous basins elsewhere. So we are looking partner on a case to case basis. We are not necessarily looking for partner to bridge the investment gap or the risk gap. It is actually the alliance which we are More interested so that they bring in value, their international knowledge of similar basins where they have succeeded. And we have some parties, the globally best parties talking in terms of specific basin.
Okay. Thank you so much, sir.
Thank you very much.
So I would like to now hand over the floor back to you for the final remarks.
So I think Thank you very much. Thank you in person and all the Please on the other side of the call, I do appreciate that you have taken your time off. We have Thanks to you by inviting on Saturday and we specifically appreciate and thanks to you once again on behalf of me, my colleagues here and ONGC. Thank you very much, and please have a nice day.
Thank you so much, sir, for addressing the session. Thank you, participants, for joining in. That does conclude our FY 2022 earnings conference call of ONGC Limited. You may all disconnect now. Thank you and have a pleasant day.
Thank you.
Thank you,