Shirish Nadkarni
OGJ Correspondent
MUMBAI, Oct. 26 -- India's state-owned Oil and Natural Gas Corp. (ONGC) has earmarked 165.7 billion rupees ($3.6 billion) for capital expenditure, a figure that is almost 40% higher than the 110.3 billion rupees spent in the previous fiscal year.
While 62.6 billion rupees will be spent by the corporation's international arm, ONGC Videsh Ltd. (OVL), the remaining 103.1 billion rupees will go toward ONGC's various upstream and downstream projects within India.
"The capital expenditure has been ramped up on a high risk, high return policy," said ONGC Chairman and Managing Director Subir Raha. "In other words, investments are being made in high-risk areas, which the company hopes will yield high returns."
Raha emphasised that a large portion of the money would be spent on deepwater exploration. ONGC has not yet logged any major discovery in its deepwater exploration efforts.
"The company is gambling big," said a Mumbai-based oil analyst. "The planned capital expenditure is far in excess of its cash flow. The other worrisome factor is that crude oil prices during 2002-03 were high; and the scenario may not hold for the future."
Raha said that the company was targeting a profit of 104 billion rupees for 2003-04.
"We are concentrating on increasing our reserves, improving crude oil recovery rates and acquiring stakes in crude oil projects overseas," he said. "During the year, we will be combing the offshore, deepwater regions of highly prospective areas like the Krishna-Godavari basin."
Last year, Indian and Canadian companies discovered a giant gas field in the Krishna-Godavari basin just off the central Andhra Pradesh coast. Reliance Industries Ltd., Mumbai, said four wells indicate that the A-1 accumulation has gas in place exceeding 7 tcf (OGJ Online, Nov. 7, 2002).
