InvestorQ : Why is ONGC setting such ambitious investment targets for the fiscal year?
indhumathi Sayani made post

Why is ONGC setting such ambitious investment targets for the fiscal year?

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2 weeks ago
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ONGC pegged its capital expenditure during the current fiscal year 2020-21 at Rs.32,500 crore. Many of the projects under implementation at ONGC got disrupted by the pandemic leading to the company now adopting an aggressive attitude towards implementation.

Most hydrocarbon exploration and production projects are highly dependent on foreign vendors for equipment supply and for drilling and other technical services. Normally, complex facilities like rigs are operated by a foreign crew in most of the cases in India.

Earlier this year, ONGC had cut down its investment plans to Rs.26,000 crore on the assumption of deep impact of the pandemic. However, now with the recovery on, they want to hurry it through with an increased outlay.

The government is losing money at the gas price of $1.79 as the breakeven price for ONGC is $3.7 per million BBTU. ONGC sees crude prices bottomed out in April as it realized $41.38 in July-September compared to just $28 in April and May. ONGC expects crude to average around $45 for rest of the year.

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