Oil and Natural Gas Corporation Limited (ONGC) Earnings Call Transcript & Summary

Ladies and gentlemen, a very good morning. Thank you for standing by, and welcome to the IR call for ONGC limited. [Operator Instructions] I would like to welcome and hand over the call proceedings to this team's speaker, Mr. Anurag Sharma, Director of Finance -- to the conference call. Sir, a very good morning. You can begin now.

Good morning, ladies [indiscernible]. I am Anurag Sharma, director onshore. I am holding additional charge of director, financial, [ ONGC ]. I welcome you all in this ONGC earnings call for Q3 and 9 month FY '22. Thank you all for joining us on the call. I'm joined here by my colleagues, [ Mr. Tongaonkar, ED ] [indiscernible]; Mr. Anupam Agarwal, chief, corporate finance; [ Mr. Mukul ] from corporate planning section; Mr. Rajeev Kumar, chief, accounts and financial reporting services; Mr. Atul Chaturvedi, chief, commercial and treasury; Mr. Rakesh Kaul, chief of BD and JV group; [ Mr. Sanjesh Divastrup ], chief of [ CM and SG ] group; Mr. Sanjay Bharti from corporate accounts; Mr. Vinod Hallan, CFO from ONGC Videsh; Mr. Nirmal Kumar, also from ONGC Videsh; and Mr. Prakash Joshi from investor relations [ side ]. ONGC has compiled its financial results for the quarter and [ 9 months ended ] 31st December 2021, which have been reviewed by the statutory auditors. The financial results have already been released on the 11th February 2021 (sic) [ 2022 ] through a press note and sent to the stock exchanges. This has also been sent to the analysts who are there on our mailing list. Here is a brief synopsis of the results. The company earned a net profit, that is profit after tax, of INR 8,764 crores during the third quarter of FY '22, as against INR 1,258 crores during third quarter of FY '21, which is an increase of INR 7,506 crores or 596.7%. The profit after tax for 9 month FY '22 has increased by [ INR 26,923 crores ], which is 596.9%. That is from restated profit after tax of INR 4,512 crores in [ 9 month FY '21 ] to INR 31,446 crores in 9 month FY '22. The increase in net profit during the current quarter and 9 month FY '22 is on account of higher sales revenue mainly due to higher crude oil, natural gas and [indiscernible] price realizations; higher other income, that is dividend income; and opting for lower tax regime, the section 115BAA of Income Tax Act 1961. The sales revenue for Q3 FY '22 and 9 months FY '22 have increased by [ INR 11,375 crores ], which is 67%; and by [ INR 28,810 crores ], which is 61.6%, as against the corresponding quarter and 9 month of previous year's. The billing, net of VAT and CST, accrued during the third quarter of the current fiscal was at USD 75.73 per barrel, as against USD 43.2 per barrel in the same period of last year. That is an increase of USD 32.53 per barrel. The exchange rate of rupee versus dollar stood at [ INR 74.96 ] vis–à–vis INR 73.74. Thus, realizations of crude in rupee terms stood at 5,677 barrels in Q3 -- INR 5,677 per barrel in Q3 FY '22 vis–à–vis INR 3,186 per barrel in Q3 FY '21, which is an increase of INR 2,491 per barrel, 78.2%, in INR terms. Similarly, gross billing for crude during the first 9 months of the current fiscal was at USD 70.26 per barrel, as against USD 37.74 per barrel in the same period of last year. That is an increase of USD 32.52 per barrel. The exchange rate of rupee versus dollar stood at INR 74.27 vis–à–vis [ INR 74.63 ], thus realization of crude in rupee terms stood at INR 5,218 per barrel in 9 month FY '22 vis–à–vis INR 2,816 per barrel in 9 months FY '21, which amounted to an increase of INR 2,402 per barrel, which is 85.3% in INR terms. Other income for Q3 FY '22 and 9 months FY '22 have increased by 709 crores, which is 90.7%; and by 2,017 crores, which is 63.9%, as against the corresponding Q3 and 9 month period of previous year, mainly due to increase in receipt of dividend income. The expenditure on statutory levies, that is royalty [ and sales ], have increased during Q3 FY '22 by 2,893 crores, which is 70.6%; and by [ 8,063 crores ], which is [ 73.2% ], in comparison with similar period [ this year ]. This increase in statutory levies is attributable to increase in sale price of crude oil, natural gas. There is a decrease of 721 crores, which is [ 39.2% ], in exploration costs written off in Q3 FY '22; and [indiscernible], which is 32.7%, in 9 months FY '22 versus corresponding Q3 and 9-month period of previous year. This is due to decrease in expenditure unsuccessful well costs [ by-well charged off ] and survey expenditures due to reduced seismic data acquisition activity [ at the nomination ] block of Western Offshore Basin. The operating expenditure has increased by 883 crores, which is 19.3%, from 4,576 crores in Q3 FY '21 to [ 5,450 crores ] in Q3 FY '22. The increase is mainly on account of the increase in consumption of materials, which was [ 380 crores ], mainly at Dahej C2-C3 plant on account of increase in prices of spot LNG -- other factors being staff expenditure, 133 crores; repair and maintenance costs, 139 crores; and [ transport of product ], 71 crores, mainly at Mumbai Offshore. Similarly, the operating expenditure in 9 month FY '22 has also increased by 2,019 crores, which is 15.2%, from 13,263 crores in 9 month FY '21 to 15,282 crores in 9 month FY '22. The increase was mainly on account of the increase in consumption of materials, 962 crores, mainly at Dahej C2-C3 plant; by 855 crores on account of increase in purchased quantity and prices of spot LNG; staff expenditure, by 446 crores; water injection, 122 crores, due to increase in activities; contractual payment, 155 crores; and transport of product, 117 crores, mainly at Mumbai Offshore. DD&I costs for Q3 FY '22 stood at INR 4,337 crores, as against INR 4,427 crores in Q3 FY '21, which is a decrease of INR 90 crores. However, there is an increase of INR 517 crores in DD&I costs during 9 month FY '22. That is from INR 11,929 crores to INR 12,446 crores in 9 month FY '22. During the second quarter, the company decided to opt for lower tax regime under section 115BAA of the Income Tax Act 1961, with effect from FY 2020, '21. Accordingly, the company has recognized provisions as expenses and remeasured its net deferred tax liabilities. The net impact due to availing the option has resulted in decrease in deferred tax by INR 8,689 crores and decrease in current tax by INR 2,107 crores in 9 month FY '22. The company at a consolidated level has earned a net profit, that is profit after tax, of INR 11,637 crores during the third quarter of FY '22, as against INR 3,637 crores during third quarter of FY '21. That is an increase of INR 8,000 crores, which is 220%. This increase can be mainly attributable to ONGC and our subsidiaries OVL and MRPL. Similarly, the company at a consolidated level has earned a net profit, that is profit after tax, of INR 37,233 crores during 9 months FY '22, as against INR 10,397 crores during 9 months FY '21. That is an increase of INR 26,836 crores, which is 258.1%. This increase can again be mainly attributable to ONGC; and better performance of our subsidiaries OVL, MRPL and OPaL which is a joint venture. Well, friends, with this, I finish my [ briefing of third quarter ] results for financial year 2021, '22. We'll be very happy to respond to any questions which you might have. We would request you to restrict your queries on financial results only. Thank you very much.

Sir, should we start the question-and-answer session?

Yes, please.

[Operator Instructions] Sir, the first question is coming up from Amit from UBS.

Congratulations for a superb performance. Sir, I have 2 questions, [ sir ], I think to the production growth. And we understand that you are from onshore. And you have this additional responsibility of director, finance, so I think you can give slightly better picture of what, how we should think about the output growth in both oil and gas from here. What are the efforts we are making? And when we see the [indiscernible] of those efforts.

Your question pertains to our plans [ for the following times ] to come.

Yes, sir, because we are still witnessing a degrowth in production, particularly gas. And so if you can give some color as to that. And what are our plans to raise the output from here?

ONGC, along with the ministry of petroleum, we have already drawn an action plan which is a short-term plan, to start with, which goes up to 2024, '25. So under this plan, we have set enhanced production targets both for oil and gas. So this action plan has already been submitted and we are [ in terms of ] implementing this enhanced production action plan.

And sir, when do you see that it will come under implementation? And do you think that -- what are the targets put in those plans? If you can give some color on that.

This action plan has already been implemented. We have already started implementing, so you can say that this is the first year. And the enhanced targets against this plan, they go up to 63.1 MMTOE, which include our joint venture production as well.

And sir, for which year?

This is for 2024, '25.

And '23, '24...

There is a smooth progression starting with -- starting from 2021, '22. Then in '23, '24, targets will be around 60 MMTOEs.

Sir, sorry. What is -- the 60 MMTOE, what -- the target is for this financial year.

2023, '24.

60 MMTOE, but sir, then you said 53 MMTOE for '24, '25. Then are we looking to...

[indiscernible]. No. What I said, for 2024, '25, our targets are 63 MMTOE. And then you asked about 2023, '24. Those are slightly less at about 60 MMTOE.

[ Okay, okay, yes ]. Sir, second question I have is [indiscernible] capital allocation. So now we are in a position where we are generating a lot of cash, so what do you see is the optimum utilization of this cash apart from investing into our production targets? Do you think that -- like global oil and gas companies are pursuing a buyback program, so we can go on the same path and return some capital to the shareholders.

We have already drawn the plan for capital utilization. First of all, our capital expenditure, as you might be aware, it is always in the range of 30,000 crores, which we have been maintaining for about past 5 years. And the action plan which I just shared with you, it also demands capital expenditure of at least the same amount, if not more. That is one. Then you are also aware that we are a good, dividend-paying company. We have already announced first dividend of 110%, and the remaining amount will also have to be paid. Then we also have our [ stand-alone ] debt at the start of the year which was around 15,023 crores. And [ over and above that ], we have plans for increased exploratory expenditures, debottlenecking of our aging development facilities. So in a nutshell, this is the plan which we have.

The next question is coming up from Kirtan Mehta from BOB Capital Markets.

Am I audible?

Yes...

Sir, would you be able to give us -- taking back on the -- Amit's question, would you be able to sort of give us a bit more color in terms of the -- where are the areas where you are targeting the increase in the production? Would you be able to share more detailed insight into it?

The production plans are divided onshore and offshore, and the major thrust remains to be on our east coast projects.

Right.

So is that sufficient?

Would be good if you can give us a bit more sort of time line and color about some of...

The KG 98/2 project, I think you're very well aware of and which is already in the process of implementation. It is about 65% complete, and by sometime during next year, we would be achieving first oil. And then this project is going to be the mainstay in terms of oil and gas production from where the major increase is likely to come for the company. Are you satisfied, Kirtan?

Yes, sir. One more question. If I -- in terms of the OVL realization when we look at this Q3 quarter. Realization net of statutory levies being paid were almost flat quarter-on-quarter despite sort of the increase in the oil price. Could you explain us the drivers in terms of how the realization is more on the OVL front?

So Vinod, can you answer that?

[ So ] total income we have recorded in 9 months is...

Kirtan, are you able to -- is this audible...

[indiscernible].

[indiscernible].

Okay...

[indiscernible].

Am I audible?

If you can come a bit closer, it will be better.

Mr. Vinod Hallan is CFO of ONGC Videsh. He is -- will respond to this question.

Your question is on the 9 months realization, right?

Third quarter realization in terms of dollar per BOE terms. If I sort of -- realization minus statutory levies and duties, if I look at it. So there has not been really a material net increase quarter-on-quarter despite sort of the increase in the oil and gas realizations.

Okay, okay. So you see we have actually 3-month quarter price. Our 9-month average price is [ $68.40 ]. And for...

[indiscernible] [Audio Gap] [ $68.40 ], and -- but with the increase of price, the royalty component also increases in every project. So that is why the net -- you don't see that kind of increase. So there -- and there is some decline in the production, 5% decline in the production, and as well as sales. So the quantity, negative quantity, variance is actually the contributor.

The next question is coming up from [ Obal Sen ] from ICICI Securities.

Probal here, sir, [ Probal Sen ]. With -- staying on OVL. You mentioned about the ambitious production plans for the domestic assets. For OVL, any updates you can give in terms of the production plan for the next couple of years in terms of where production growth can come from? And second part is that any updates you can share on what is happening on Mozambique. Has there been any update or any progress in resolution of the political problems there?

Mr. Nirmal Kumar is representing ONGC Videsh. He will -- he is responding to this question.

Okay, coming to the first part [ of the question ], and that is with regard to production. Okay, if you see our previous performance, we reached highest-ever production of around 15 MMTOE. That was fiscal year before last. That was '19, '20. And then in 2021, there had been OPEC-plus cuts and the pandemic impact leading to CapEx deferrals, because of which our production went down to around 13 MMTOE. This year, some of that impact also remains both in terms of CapEx deferrals and also some component of the [ OpEx there ]. So this year also, we might not be in a position to reach the [indiscernible] 15 MMTOE that we produced last year. It will be slightly lesser, but you also have to consider the major impact of our gas production, where 10% of our production comes from Vietnam on an overall basis. And 30% of our production of gas comes from Vietnam. And this particular project, which was acquired way back in 1989, is reaching its [ end of its fees ] and is contractualized. That directly impacts our production going forward. Therefore, summing up all this, till the time that Mozambique [ kicks in ], which will be '25, '26, the gas production will lag. And our projections continue to be, for the next 2 years, around this 12.5 MMTOE that I am listing presently before it picks up further with Mozambique. Now coming to your second specific question, on Mozambique situation. Mozambique, as you know, went into force majeure in April 2021, with the consortium deciding under the EPCIC [indiscernible] to declare a force majeure; and later, as per the exploration contract, to declare it in May. Since then, there has been a lot of progress as part of the security situation in the Cabo Delgado provinces concerned, because of which, with the deployment of the Southern African forces and also that of the Rwandan forces, the situation has improved dramatically. The operator, which is Total, is calibrating the situation closely. However, the consortium is very clear that, till there is a sustainable solution to the security situation, we cannot start operations. In other words, we cannot start operations again just to stop it again. Therefore, we are hopeful that going forward in 2022 we will be in a position to resume operations. However, Mozambique's force majeure, as has been declared by the operator publicly also, will impact the production at least by a year...

So till date -- got it, sir. So if I can just ask a small follow-up. So till date -- if we can get a sense of how much investment has been made in this asset till date. And is there any thought of sort of taking a small -- have we taken any impairment on this given that the production still remains fairly uncertain from this project as of now?

[indiscernible] production does not remain uncertain. The reserves are some of the biggest in the world. 63 Tcf of oil and gas production is not an issue. There is no question of taking impairment on this basis alone. However, as far as production is -- financing is concerned, you know broadly our acquisition costs. And apart from that, we have made some cash calls, but the major part of the project financing which comes from -- major part of the financing in the project comes from project financing. Therefore, there is no direct exposure [indiscernible] related CapEx to any further CapEx commitment to Mozambique.

The next question is coming up from Gagan Dixit from Elara Capital's.

Yes. Sir, there is a news that [ this new ] consortium will also start working on some [ strategic ] basin discoveries in Brazil, [ further oil ] discoveries, so can you throw some light? Like what are the reserve potential estimate for you; and if everything goes right, when you expect anything, from the first oil? And what is the [ oil ] production? Anything expected? If you have anything, view over it, sir.

You are referring to some media news. I will have to check, and we will come back on this.

Okay, sir, okay, okay. Actually this is about the -- I think, some 8, 10 years old discovery of OVL in Brazil, like -- sir, other than that, I was just checking the presentation, sir. So it mentioned something 4 major redevelopment projects that you are working. There's the cluster 8 and then Mumbai High and south redevelopment phase 4 and Heera redevelopment, so can you throw some light on the -- this -- what is the -- I mean, the incremental production expected [ from these things, sir ]?

Okay, give me a minute. [indiscernible]. Okay, the first project which you referred was Mumbai High south redevelopment phase 4. This project is -- has an envisaged oil production gain of 2.4 million tonne of oil and [ 0.57 ] BCM of gas. This project is 88% complete. Second project was cluster 8 marginal field project. This has oil gain of 4.38 million tonnes of oil and 0.46 BCM of gas. This project is 94.19% complete. Then Mumbai High north redevelopment phase 4 envisaged oil production gain is 4.19 million tonne of oil, 0.51 BCM of gas. This is 53% complete, so -- and one more. You -- [ I forgot which one ]...

So it's Heera redevelopment, sir, Heera redevelopment phase 3, sir.

[indiscernible]. Heera, as far as I remember, it is already complete. And it is not -- it has been implemented.

Okay, sir. And also, sir, if you can give some idea about R-series, [ perspective ] also on that development [indiscernible].

Okay, just a minute...

[indiscernible].

I'm sorry. Heera phase 3 project, it has oil production targets of 3 million tonne of oil and 5.82 BCM of gas. This is 78% complete. This is still ongoing...

Okay, sir. And R-series, sir...

R-series is complete.

[indiscernible].

R-series is completed [indiscernible].

The next question is coming up from Mayank Maheshwari from Morgan Stanley.

Sir, I had a few questions on the production side. Can you just help us understand of where the production run rates are for 98/2 on [ gas while you're ] thinking about the ramp-up now? Have been -- the supply chain and logistics issues around that, any resolved? And any update around that? Can you help us with that?

Yes. 98/2 gas production presently is 0.6 million standard cubic meter per day. And third well is also complete and it is shortly going to be hooked up. And by the end of March, it is likely to contribute another 1.75 million standard cubic meter per day, but otherwise, this project would start its peak production from '22, '23 onwards. Are you interested in any more figures?

Yes, if you can just give us the ramp-up, sir, in '22, '23 and '24. How are you thinking about it? And where are we in terms of your CapEx plan and logistics side as well? How much is those issues resolved now? Or it's still work in progress.

There have been some issues which we are trying to resolve at various levels, but still we are hopeful that we would like it -- we will be able to achieve [ pre production of 2.2 million ] tonne, which is around 44,000 barrels of oil per day; and 3,798 million standard cubic meter of gas, which is 10.41 million standard cubic meter per day, in the year 2023, '24.

Got it, sir. Sir, that's very helpful. And sir, the other question was on the production side, was more related to I think you had in the press release talked about some issues around typhoon as well as the Sagar Samrat side. Plus I think the field on gas side and the -- has been a problem. Where are we on those in terms of normalization of production right now? [indiscernible]...

So in terms of -- are you referring to impact of Tauktae on our production? Or because these 2 issues are...

I think in the press -- yes. So I think there were a couple of issues that you were -- kind of laid out in your press release around what led to lower production this quarter on the stand-alone basis, so I just wanted to check on where we are in terms of some of those issues. And have things normalized [indiscernible] in terms of production volumes?

Yes. One of the issue in the press release was delay in mobilization of Sagar Samrat because we had some issues pertaining to its modification work. And now we have been assured that this modification work has been complete and Sagar Samrat will be mobilized soon. And WO-16 cluster project, which was affected because of it -- so that will come on stream as soon as it [ arrives ].

Got it, sir. And I think -- and sir, the last question which I had was more on -- related to an auditor comment on OMPL in your notes to accounts, if you can just highlight what it is. And can you just help us understand of how you guys trying to resolve that? So note 4...

Yes. Our -- Mr. Rajeev Kumar, chief of our accounts group, he will explain it to you.

Yes. Mayank, there is a point relating to OMPL. OMPL has carried out some impairment tests. And as per the impairment testing, the cash flow position suggests there is no impairment. OMPL auditor as such has not commented on the aspect in their report. However, MRPL auditor -- because MRPL is the holding company for OMPL. So MRPL auditors were not convinced with that exercise. And they had [ content ] on the investment impairments in OMPL, which right now is a comment. However, in the next quarter, the issue will be reviewed at the ONGC level in totality, and we'll ensure that this comment is taken care of.

The next question is coming up from Ramesh from Nirmal Bang Institute.

Congratulations. I'm from Nirmal Bang Institutional Equities. So the first part is what is the kind of sense you're getting on the likely changes in the domestic gas price. Because there's a steep increase expected. And there are some concerns about the end users for the preferential allocation segments like the CNG and domestic [ PNG ] segments. So any thoughts? Or any discussion between the government and the industry to possibly ameliorate the impact? [ Or what's the sense ] you get on that?

The issue pertaining to domestic gas price has been affecting ONGC because, the gas price, which was on the basis of APM formula, it was calculated at [ 1.79 ]. It has now been revised to [ 2.9 ]. And the -- it was barely enough to meet our production cost, so we have been taking it up with the ministry. And we had been requesting for pricing and marketing freedom. And this is what we have been trying, and we hope that it will be implemented as early as possible by the government.

Yes. So no, I understand that for you it is a benefit. And if it's implemented, what we essentially get is the domestic price can exceed fixed dollars, a steep increase. So in terms of the end user, both CNG and domestic gas, still imply a steep increase in their prices. So your view is that, that formula will continue for the [indiscernible]. Is that a correct understanding?

As far as we are concerned, we have to produce oil and gas. And we have -- we would like to be remunerated at least the production costs which we are incurring. Otherwise, it will be very difficult to continue to explore and produce oil and gas. So this is why we are requesting that market [ process ] should decide what the price of oil and gas should be.

Okay, fair enough. So in terms of your production plan, can you give us the breakup [ for ] gas production increase within ONGC excluding KG gas? And what is the number you set for FY '24 and '25 from KG gas?

You're asking for the next year's figures. Or...

'24, '25...

Yes, if we can get it in terms of the increase in gas production for FY '23 and '24 excluding KG gas. And what is the number you expect in KG gas?

Which is total...

[indiscernible]...

[indiscernible]...

For '23, '24, our gas production is expected to be 22.16, out of which, 3 BCM is expected from KG 98/2 alone.

Okay, this is for '24. How about '23, -- '22, '23?

[indiscernible].

Yes, so how about for '22, '23?

[indiscernible] -- it will be 26.36.

And how much will be from KG?

KG contribution would be about 3 BCM.

It's 3 BCM in '22, '23 also, okay, yes.

[indiscernible]...

So yes. Are you still confident of that peak of 15 million cubic meters per day from KG? And when do you expect that, assuming the CapEx progress as per your expectation?

See, there have been some delays, but we are making all efforts. The third well, as I said a little bit earlier, is likely to come on stream later by the end of March. So we're trying to maintain figures and we are trying to expedite and minimize delays wherever they are taking place.

So by '25, you should get to that 15 MMSCMD. Is that a correct assessment?

[indiscernible] million standard cubic meter per day. The gap between 10 million to 15 million, we are trying to look into those things to expedite so that it goes in, but as of now, the forecast is about 10 million standard cubic meter per day.

Okay. And what is the CapEx you have incurred in KG year-to-date? What is the number now?

The -- so far, investment is around in the range of 15,500 crores.

Okay. And what is the full CapEx expected over the life of the field, say, to achieve that 10 million, 15 million, [ whichever you are ] about right now?

The plan estimate was 34,000 crores.

Okay. And this will happen over the next 3 years, the difference between 15,000 crores and 34,000 crores.

Yes.

Okay. So just one last one. In terms of the OPaL performance, can you give us, what is the revenue and profit from OPaL for third quarter and 9 months?

Yes. Just a second. For third quarter of '22, OPaL had -- OPaL was EBITDA positive with 939 crores, but it incurred a loss of 355 crores. And for 9 months, it was EBITDA positive with [ 2,229 crores ] but had a negative PAT of 153 crores.

So EBITDA 3 months was 929 crores.

[ 2,294 crores ]...

[indiscernible].

For 9-month FY '22.

Yes. And what was it for 3 months?

For 3 months, this was 939 crores.

939 crores, okay.

The next question is coming up from Puneet Gulati from HSBC.

Yes. Congratulations. My first question is with respect to you've talked about production growth. Do you foresee any risk for a material decline in production from any of your [ gas royalties ]?

Yes, the forecast is based on the analysis which our institutes carry out, which our engineers carry out. And for the past few years, we have been successful in attaining those targets. And we continue to be optimistic about the future as well.

Right. So are you saying that the gas production for [ the company ] per se in FY '23 can go up by 10.4 million, which is the KG -- big delta coming from KG basin? Or we -- should we be worried about any negative surprises there?

Yes, 10.4 million corresponds to KG 98/2 coming on stream, and we are trying our best to realize this target.

My second question is, is there a capital allocation plan towards your renewable business as well? And if you can elaborate a bit on that as well.

Yes, we do have a plan -- just a minute. On renewables, as you are -- as you will be aware, that we already have an installed capacity of about 184 megawatts, which includes both wind energy and solar energy. And another 20-megawatt solar projects are already underway. Besides this, we had 2 major initiatives. We signed an MOU with Solar Energy Corporation of India end of December. This is for development of renewable energy-based power; and other environmental, societal, governance projects. Also we signed an MOU with NTPC. It was done last year. And once this joint venture is approved, we plan to take renewable projects along with NTPC. Besides that, we have taken some other initiatives. We already concluded a study for offshore wind projects. We are also looking into carbon capture utilization and storage projects along with IOC, or CO2 EOR [indiscernible]. Then we have also taken up the country's maiden geothermal field development project in Ladakh. So these are some of the projects which we are taking up, and these will take shape in times to come.

[ Great ]. Is there a target for the total capacity that you have in mind?

I'm sorry. I couldn't get -- we have 184 megawatts installed...

Yes, but is there a target? So most of the firms have now started giving targets for 2025, 2030 [indiscernible]. Is there something that you've crystallized as of now?

[indiscernible].

Under our energy strategy 2040, we have a target of 10 gigawatts for renewable energy.

The next question is coming up from [ Vark Arajan ] from Axis Mutual Funds.

Sir, my question is about the CapEx in KG, that 34,000 crores number. Is there an escalation which is expected?

And for the KG project, which is about 65% complete, the wells have already been drilled. And since all the contracts are at an advanced stage -- and these are LSTK type of contracts, we don't anticipate any delay at this stage -- any escalation of costs at this stage.

Fair enough, sir. Secondly, about this 30,000 crores of annual CapEx and plus incremental CapEx. Like when you talk about it, plus incremental CapEx, that essentially refers to your [ KG ] plus all the other [ development ] expenses. So any idea you can give in terms of what could be the quantum on an annual basis over the next few years?

[indiscernible].

As I said earlier, our capital expenditure has been in the range of 30,000 crores, which we have been maintaining in last 5 years. So this is we are hopeful of maintaining the same. And this might go up if we get some exploration opportunities and some debottlenecking of our existing facilities comes up. So we are expected to maintain in the range of 30,000 crores.

Okay. As I understand, like this basically includes all the new development plus KG all put together. You will continue to maintain 30,000 crores kind of a run rate. Is that correct?

Yes, it's correct. Yes, that's correct [ actually ].

And OVL, will you be able to give some kind of a guidance in terms of CapEx?

[indiscernible].

Yes. Just a moment.

OVL CapEx has been consistent at around [ USD 1 billion ] for the past 3, 4 years. This year, we had a higher allocation for CapEx because of Mozambique development. However, because of the force majeure there, we have cut back on that, but going forward, this is supposed to pick up. And it will be around [ USD 1.2 billion ] or so for the next 1 or 2 years. Beyond that, this CapEx, of course, does not take into account any potential acquisitions that we might do.

[ Great ]. So this [ $1.2 billion ], like ex Mozambique, will it be significantly lower? Or could it be still [indiscernible]?

That's -- it has been, for this year, almost 55% of our CapEx at 8,000 crores coming from Mozambique. And because of the Mozambique deferral of CapEx, our [ RE figures ] have come down substantially. Next year, we have again planned for Mozambique, and hopefully, we'll be able to [ reach ] the target of 8,000 crores next year.

One last question, on OPaL. Any volume guidance plus current utilization? And any feedstock mix [ that you haven't shared ]?

Yes, just a moment. For 9 month, the capacity utilization of OPaL was 93%. And for this quarter, third quarter, it was 99%.

And any feedstock, sir?

Feedstock...

[indiscernible].

[indiscernible].

[indiscernible].

[indiscernible].

Ethane and naphtha. The feedstock mix of ethane and naphtha...

Yes, any breakup in terms of mix, percentage or mix.

60-40, approximately.

60 in favor of gas [indiscernible].

Yes.

The next question is coming up from [ Krishna Kumar ] from Spark Capital.

Vishnu Kumar from Spark. Sir, just wanted some clarity again on the production numbers that you have given, sir, if you could just split for FY '23 stand-alone oil and gas numbers again.

Okay. For FY '22, '23, the stand-alone numbers which you asked, these are estimated at 20.98 for oil.

Okay.

And 24.28 for gas.

Sorry. Your voice is cracking, sir. So 24...

24.28 for gas.

Okay. This is for '23, okay, got it, sir. For FY '24, what would the oil and gas number again [ will be ], sir?

It will be 24 and [ 22 ].

24 and [ 22 ], okay. This will be [ 46 ], understood.

Right.

So close to 45. So more or less, '22 and '23, but -- we don't think a major except for marginal increase in gas production. Oil will remain flat.

Yes.

Yes, oil, we will be able to -- I mean we will be able [ to have a ] decline. And gas -- with KG 98/2 coming on stream and some more projections coming on stream, the gas production is expected to increase.

[indiscernible].

Understood. OVL, you expect the number to...

Yes, please.

So for OVL, do -- you expect the number to be around 12.5 million tonne for the next few years, 12.5 million tonne.

[indiscernible].

Yes, you're right, in that range.

And second -- understood. And second, you mentioned 30,000 crores CapEx more or less will continue, but you did say that also we may consider something. If you consider additional CapEx, would it be another 10,000-odd crores, the magnitude will be very high? Or do you expect only a few thousand crores up and down?

That will depend on the projects which we might have. So as of now, the likelihood is of maintaining 30,000 crores, but if we get some interesting projects or some [indiscernible] rounds, some exploration blocks -- so the investment required for those licenses would initiate -- would necessitate some more investments.

Okay. Any next update would come by when, sir? I mean if you are going to increase the CapEx. As in like do you take a mid-term review by June, July? Or is it again next year? Just trying to get a sense.

[indiscernible]...

We will let you know about this because this review will be carried out once we get all that information which we require for this review.

[indiscernible]...

Understood, sir.

Okay.

On the KG 98, what is the gas price that you are currently getting? And what do you expect it in April, [ specifically on ] KG? And also if you could just highlight to us what will be the APM price that -- indicatively that you are seeing [ now ].

Ceiling price...

For KG 98/2, we as of now have allocation of about 1 million standard cubic meter per day. And the gas price which we are getting is -- it was discovered during the tender process, but it is limited by the ceiling price, which for deepwater and HPHT fields is published. So as of now, we are getting the ceiling price for 98/2.

[indiscernible].

[indiscernible].

6 -- what is the price? I'm sorry.

[indiscernible].

[ 6.1 ].

[ 6.1 ]. And this ceiling will remain so, or will it increase in April?

So as we understand, this is expected to increase, but how much it is going to increase, that we'll come to know only when this exercise is complete.

Understood, sir. What is the price that you are seeing in APM, sir? Is it between [ 6, 6.5 ]; or high -- or less than that? What do you see as the gas price for APM in April?

This again -- because it is calculated based on the [ hub ] prices, this is again expected to increase, but again this will depend on the formula and the inputs which are required for calculation of that formula.

Understood, sir. Sir, one final question for me. I mean, given the steep increase in prices in crude which you are seeing almost after 2014, '15, any thoughts on subsidy sharing and specifically [ on LPG side ]? Any thoughts on that? Essentially, on [ cash ] utilization, do you think the government will claw back some through subsidy sharing that you are seeing today? Any thoughts on that?

This information, I cannot give, but we have been requesting the ministry and advocating for a market-based pricing for oil and gas.

The next question is coming up from [ Solmiya ] from Spark Capital.

Yes. Sir, can you just help us with the debt numbers both at stand-alone and subsidiary level?

You ask for debt numbers.

[indiscernible].

[ Yes ].

[indiscernible]

[indiscernible] debt...

[indiscernible].

September '21 is 6,779 crores.

[ Yes ].

For ONGC, the outstanding debt...

[indiscernible].

Stands at 6,779 crores.

What will be the consol debt?

Consolidated...

[ Debt. Balance sheet ] is not prepared for the quarter 1. Half year, we can say.

[indiscernible].

This information is not readily available with me as of now, but...

Half yearly...

Got it, sir, okay. I mean, would we have OVL debt numbers [ around, sir ]?

[indiscernible].

[indiscernible]. Okay, for OVL, as on 30th November...

[indiscernible].

30th September, the debt is [ 27,685 crores ].

[indiscernible].

Got it, sir. Sir, with respect to the OVL CapEx, you did mention that guidance of 8,000 crores, what you're looking at, excludes any potential new acquisition. Now given that Vietnam, as you mentioned, is kind of declining, is this something that you're thinking about, as to further augment the portfolio there? Is this something that is [indiscernible]?

This is an ongoing exercise. The ONGC business development team keeps on working on it. And they are at this point also looking at several offers. So this is an ongoing work which is being carried out by ONGC BD division.

Okay. And also one question with respect to KG 98: So what will be the [ break-even ] gas price, sir?

This information, again, is not available with me right now, but for company figures, I can share, if you want.

[indiscernible].

[indiscernible].

This is for...

Yes.

Yes, [indiscernible].

[ It -- MMBtu ].

For ONGC, it is $3 per MMBtu. Cost of production for the company is $3 per MMBtu.

So what will be the [ cost rates that are concerned under this ]? This includes depreciation also.

Yes.

Yes.

Yes, yes.

Yes, it includes depreciation also.

Thank you so much. There are no further questions at this point of time. Turning the program back to you, sir, for your closing comments.

[indiscernible] talking about...

Just to supplement: $3 per MMBtu, the cost of production which I shared. It does not include the returns on capital employed. So this is excluding that [ figure ]. Just to clarify. So if there are no more questions, then can we close?

Yes.

[indiscernible].

[indiscernible].

Thank you so much. And thank you, respected speakers. Thank you, participants, for joining the call. Wish you all have a great day and requesting to please stay safe. Thank you so much.

Thank you very much.

Thank you so much.