Oil and Natural Gas Corporation Limited ($ONGC)

Good morning, ladies and gentlemen. I'm Madhvi, moderator for the conference call. Welcome to ONGC's earnings conference call for quarer and year ended on 31st March 2026. We have with us today, Shri Arun Kumar Singh, Chairman and CEO, ONGC Group of Companies; Shri Rajarshi Gupta, MD, ONGC Videsh; Shri Manish Patil, Director, HR having -- additional Charge Director, Finance, ONGC; Shri Anupama Agarwal, Director of Finance, ONGC Videsh; and team who will interact with the investors and analysts to discuss Q4 earnings. [Operator Instructions] Please note, this conference is recorded. I would now like to hand over the floor to Shri Manish Patil for his opening remarks.

Good morning, ladies and gentlemen. I am Manish Patil, Director, HR, ONGC, having additional charge of Director Finance. I welcome you all to this ONGC earnings call for Q4 and financial year ended 2026. Thank you all for joining us on the call. As said earlier, we have with us Shri Arun Kumar Singh, Chairman and CEO, ONGC; Shri Rajarshi Gupta, MD, ONGC Videsh, Shri Anupama Agarwal, Director Finance, ONGC Videsh. Also present are my colleagues from ONGC Shri Yugesh Nayak, CFO; Shri Ajay Kumar Singh, President, Planning and Transformation; Shri Satish Kumar Dwivedi; Chief BD and JV; Shri Singh Negi, Chief of Investor Relations; Shri Sanjay Kumar Sharma, Head, Investor Relations; Shri Prakash Joshi from Investor Relations and Shri Akhilesh Tiwari, Head Corporate Accounts. ONGC has combined its financial results for the quarter and the financial year ended 31st of March 2026, which have been audited by the statutory auditors. The financial results have already been released on 26th May 2026 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 at the consolidated level has earned profit after tax of INR 13,678 crores during Q4 FY '26 against INR 8, 965 crores during Q4 FY '25, which is up by 53%. There is also an increase of 3% in consolidated annual PAT, which is INR 49,793 crores during FY '26 as against INR 38,329 crores during the financial year 2025. This increase is consolidated PAT is mainly supported by performance of our subsidiaries HPL, MRPL, OVL and OPaL. Now coming to stand-alone financials, there is an uptick of 3% impact on a quarter-on-quarter basis on account of improved crude realization and rupee depreciation. The company has earned profit after tax amounting to INR 6,650 crores for Q4 FY '26 against INR 6,448 crores earnings during Q4 2025. Annual PAT for FY 2026 stood at INR 32,894 crores against PAT of INR 35,610 crores for FY '25 impacted by lower per barrel realization of crude oil. have decreased by INR 4,820 crores, that is 15.6%. That is from INR 30,968 crores in FY 2025 to INR 26,148 crores in FY 2026, mainly due to lesser realization of crude and abolition of SAED with effect from 2-12-2024. There are an increase of INR 3,373 crores in other expenses, during financial year 2026, that is INR 28,004 crores in FY 2026 to INR 24,731 crores in FY '26. This is on account of increase in provisions and writes by INR 1,142 crores, an increase in exchange loss by INR 1,932 crores. Provisions and write-offs has increased on account of one-off provisions in Q4 FY 2026. It includes provision of GST and royalty of INR 235 crores, expenditure of INR 262 crores related to KG98 Ba2 return as as per opinion of ICAI, which was previously capitalized provisions for old outstanding receivables of INR 257 crores, provision or store and space of INR 280 crores. There is an increase in exchange loss by mainly on account of depreciation of INR versus U.S. dollar by INR 9 per U.S. dollar that is 11% and financial year 2025 versus financial year 2026 and upward revaluation of foreign exchange liabilities. ONGC declared 3 hydrocarbon discoveries during financial year 2026 in its operated. All the discoveries are in Chawathe region of Mumbai offshore to our new prospects and 1 is new pool discovery. The stand-alone crude oil production was 15.355 million metric tonnes during FY '26 as against 18.558 million tonnes in FY 2025. and stand-alone natural gas production was 19.533 Bcm in FY 2026 as against 19.654 BcM FY 2025. While ONGC's production has remained broadly flat in recent years, the company has not taken a series of bold structure and long-term initiatives to address exploration and production challenges. ONGC has entered into multiple new ventures and strategic partnerships for overall production growth, entering into new business verticals, expanding renewable footprint and as a strategic enabler for strengthening our subsidiaries. The Board has recommended final dividend of 20%, that is INR 1 per share with a dividend payout ratio of 50%. The total dividend a financial year at '25-'26 would be 265% That is INR 13.25 per share of the face value INR 5 each, with the highest ever total payout of INR 16,669 crores. Then with this, I finish my briefing of the results of the fourth quarter and financial year '25-'26. Now I will request Arun Kumar Singh, Chairman and CEO, ONGC, address the attendees to give you a detailed overview of the performance and future road map. Thank you .

Good morning, ladies and gentlemen. So it is a great pleasure for me to interact with you. First, to give you broad 30,000 feet view, and then we can take questions. First and foremost, if you take E&P side of our industry, ONGC now is 23 E&P and 1/3 non-E&P at a group level. So 2/3 you see E&P, which continues to be the main thrust. The 2, 3 macro trends, if you see is basically, first one is that you might have heard that is a great push towards exploration. And government is seriously considering to fund particularly deepwater exploration, which we were doing so far at our cost, but our size was small. So now deepwater exploration is coming in focus from government side. Second, you see at policy level, which is a macro level. If you can read the pattern of time, government removed reduced royalty from our onshore productions and basically, these all royalty post wellhead could add in the direction of promoting E&P in country. In fact, taking a hit on government-owned revenue and usually giving that money to you for increasing production or doing more exploration. . So that intent, plus also, you must have noticed that unlike previous decade, this time in the oil hit $130, steel SAB did not come. So we thank them for that because whatever market price is there, ONGC is able to realize that. So in fact, ONGC now is you can say safely that other than the APM gas, government is not controlling any of our revenue stream. . It is purely led to ONGC to manage the revenue stream, be it production or be it the price. The only area where government is involved today is APM gas. First and foremost, we want you to know that ONGC producers today and sell more gas than oil. In fact, gas is now basically more than oil. And gas side, if you see now, we are in new gas, which was last year, say, last year was around -- volume-wise, it was 17 and revenue was 21. This year, we can safely -- we can do your old number currency. There's a big jump in new well gas already from 1st April, it is 9 MMSCMD plus. You can expect another 3 very easily because our new project is new well gas only. So out of 12, 12 say, whatever we sell, so 25% of our gas has become new well gas. New well gas, if you notice, we get 12% of crude. So virtually, this is international price. In fact, world over local market, I don't think there is any market in the world which pays more than 12% of oil price. LNG is different because LNG liquefaction and all that cost. But probably India is the highest paying new -- for new wells, India is the highest paying market in any onshore thing. That also goes to prove that government's intention is to leave more money with E&P operators to do further production and exploration. Now bigger story, therefore, in our market today is that gas -- new well gas will be always on rise. Now from 17%, this has already jumped I think it will be a 30% time will tell. But ultimately, because there is some margin we have to take for what happens. But literally, it will be between 25% to 30% anywhere this year. And next year, it will be again 30% to 35%, 34%, 36%. Every year, because as you know, why I'll explain you this why new well gas on rise. That doesn't mean that gas production is in the same ratio rise because it is gas is shifting because our old wells are dying and nearby well drill new wells to produce same gas or more gas. And therefore, the $7 gas is gradually getting replaced by 12% gas. So that is only a matter of time before 4, 5, 6 years max, even if a government policy doesn't change. If the same policy continues, when almost almost 80%, 90% of ONGC gas will be new well gas. So this is something that you can factor in, in your calculation that new well gas what price at crude price of, say, $90, we get 10.8%. 10.8% in the local market is -- we evaluate more than oil to be very frank with you because of different reasons that we cannot share with you. But our gas is not as cumbersome as oil. So that's it. So it leaves more money in our pocket. So that is so far the gas part is concerned. Third part India is oil may be flat, but gas because -- or unless we get some major discovery, gas will keep growing, like, for example, here itself, we have started opening the wells out of 15 wells. We have already won 4 wells for DoD project, which is supposed to be 4.89 MMSCMD and gas. Progressively, we do it because one by one to balance system. So if you take that quantity of say 4, so 4 on total our gas sales is to be say production is around 53%, 54%. So even production-wise, it is -- and these are all need sales gas. So what I'm trying to tell you that every year, 7% to 8% increase you should expect in gas because this year is the DoDP, next year is BASF. BASF is also again 4 to 5 gas. Plus also, we are hopeful to open complete 98 2 gas wells because the wells are complete. Now platforms are complete. Often, we told you that, that project was inordinately delayed for geopolitical and because all the vendors were foreign based. Now we are hopeful that now last year there will piping connection, which is internal to our work. So July, August we'll open those wells too. So you can safely assume that our gas production will be up and compared to last year. And next year, also gas production is up on account of. So it is not only for us. it could be true for other operators, too. So gas production and gas is becoming more attractive because of the price that Indian market pays for gas. So this is something that I wanted to tell you. Then third thing that fourth thing is important is that we roughly drilled around 500 wells, 500 wells, 100 wells are exploratory wells and around 400 are producing wells. This year also, we are increasing a little more to 50 to 60 wells or a little more than that we drill more. So for the reason to basically augment or support our production base. But at the same time, you should be mindful that in this business, oilfield depletes, pressure goes down. And therefore, every time we have to search for new. Fortunately, for last year, our reserve replacement ratio in '25-'26 is more than 1.1%. It is 1.15 or something like that. 1.17. It means we found new oil and gas equal to what we sold. So it means R P ratio almost remains at the same result to production ratio. Reserve to production ratio, rupee is around 700 plus, which is almost 2, 3 million tonne lesser more compared to last year. So futuristically, these are relevant for you. So I thought I'll give that information to you. Now coming to our bigger commitments. Bigger commitments are this year. One thing you must know that I want you to know that we are today executing almost around INR 33,000 crores of project in Western Offshore. That is currently working. Work is going on. That is total project value is INR 33,000 crores. These all are there to either sustain production or increase production. So you can be -- you can draw your own numbers that how much will contribute into increased production. . So that is something that we are -- we want you to know. Plus also, we have this year also we are in the process of -- that we'll share with you at opportune point in time that how much we are doing new projects. So basically, that part and then one more thing we want you to know that global outlook also better than us. Global outlook for oil prices certainly for the next 2 years is better than what it was previous 2 years. So you have to draw your own to see that where ONGC will be. This is, by and large, I've shared ONGC picture of the price. One thing which is we really are very proud that for Western Offshore, which is roughly about 60% of oil and 70% of the gas comes from Western Offshore. So Western Offshore is our lifeline. You may be aware that we gave BPTSP contract for Mumbai hi. Mumbai Hai was only 38% of total Western Offshore. And yesterday, day before yesterday, we awarded TSP 2 for remaining 62% Western Offshore. . So now 100% of Western Offshore is with. So -- and we had -- we shared with you the number that on the baseline number, BP showed a good result, although in our industry, even the leaf doesn't move less than 2 years. So anything we do, it takes time in the E&P industry. But first year itself, they showed some operational changes here and there, and we could see some results. Now the big things are under execution. Big things means CapEx projects, mainly the injection water injection wells, producers what does the group work means our TSP team did. That was we are under execution. This year, we'll execute 40%. And next year, we'll execute the 60% of recommendation. And remaining, which we are just now awarded, I hope that next year will come for execution and for remaining 62% of the field. So TSP, we are betting big on TSP with BP and at least initial shoots prove the line of thinking was right because that too in a very short span of time, like appealing. So we are very hopeful about outcome from that. Now one more thing we want to share with you is 98/2 I shared with you guys. But I'll be very honest to say that we had some geological surprises in production in 98/2 oil, but we have almost got full handle on it, and we know what to do now. So what to do now in terms of sustaining the production. So this is something that we should -- we -- yesterday in our press release, also been mentioned, but gas wells will open. And now we have best international experts to -- also to suggest at what to do best in 98/2. These are small, small interventions that we need to do, and that we'll do in the short source of time. So this is something about E&P. Now coming to OVL, our subsidiaries and our other activities, the primary -- the first thing you might be aware, we are back Sakhalin and Sakhalin is full blast. Russia is producing almost what it was producing pre-Ukraine. Sakhalin is at the same level. So you can draw your own inferences what kind of thing it can do to industry group because Sakhalin is our numeral set in the cap of OVL. Second good news of a company is that Mozambique project is progressing very fast. There are 6,000 persons on the site doing project. We hope that if everything goes well, '28 or something we should have our LNG. So this is something that is happening good on the front of OVL. The rest, third thing is -- also important is Venezuela. We are very hopeful that Venezuela, we are producing something county, but now in the new regime of American new regime, we are hopeful that our production will go up substantively after we get the license in the new regime that is the U.S. regime and all that. And hopefully, Venezuela start showing good number of production in the year to come. So this is something that on OVL side. OPaL side, was promised, we had promised that we'll turn it around. We almost turned it around, because last year, if we had some small issue, otherwise, our EBITDA was INR 1,500 crores, but we achieved INR 1,206 crores, but there were some last month mark issue came and with the industry, we have to shut for want of gas because I guess what that takes some guess what diverted to LPG and all that. So Otherwise, we were there. What we had announced that INR 1,500 crores will be our EBITDA of OPaL, and let's hope that next year that is this year, as, again, our interim target is INR 1,500 crores to INR 2,000 crores. It achieves a EBITDA of INR 2,000 crores. Now we want to share with you that something that is last 4, 5 years, you must have observed us that we have been very bullish on OGL ONGC Green Limited, ONGC Green Limited is having 2, 3 mega, 1 is 100% subsidiary call, which we acquired from PTC and the other one which we acquired NTPC. That I&I is now 3,000 megawatt plus, and hopefully, it will add another 1,000 megawatts in this year. So there, we are almost with our own production what we had. So we have become now -- we can say that now we are almost close to 3 gigawatt by next year in terms of our renewable portfolio. And also a it's turning out to be a good -- I said because it has old PPAs and all that, as you're aware. So it is something that renewable side, that is our flagship. Cost reduction side, I want to talk about because cost reduction side, we had promised INR 5,000 crores. We almost got INR 4,000 crores. You will say that where is that money gone. So money has gone in terms of GST went up in oil and gas for input 12% to 18%. So that itself wiped out to INR 2,000 crores for us per year. I'm saying everything put together. And then second issue came is this dollar conversion over this rupee depreciation. So this ate away all that INR 5,000 crores INR 4,000 crores we saved, but we are on course to save INR 10,000 crores. I've told you that hopefully in another INR 3,000 crores, INR 4,000 crores will come out with a host of effort, which is already in place. Now shipping side, as you are aware, we have formed a JV with Mitsui. We have ordered 2 ships for very large tankage for our OPaL. So shipping side, that is something that is ever activity. Now petchem, we have -- that also we have shared with you in the stock exchange filings that we have approved the creation of a JV between MRPL and OPaL to have better synergy in petchem marketing. So these are 2 of our companies and two having independent everything. So we are basically agenting the marketing part so that there's 1 umbrella brand under which the product gets marketed. So this is something that we have approved. It is now in the final stages of the statutory requirements. So hopefully, there also some value should get created. Yesterday, in our Board, we approved a port business. We are in -- we yesterday approved the formation of a new JV with Gujarat Maritime Board to create a new port at the Dahej. I want you to know that the Dahej is the least most least distance port from denser population part of the country. So naturally, anything to land at the Dajej cheapest for the country in terms of transportation, further transportation. But the Dahej as you know that the Dahej also is nearest for the LPG pipeline that is 8 million tonne pipeline, plus the this port we'll have our own interest of this OPaL plus LPG. So it is from day one it comes -- it should be very, very highly financially viable and commercially profitable venture. The 50-50 JV between us and Gujarat Maritime Board. So this is something that -- so if you notice, 5, 6 new JVs have come in recent times, basically increasing our chances of other revenue streams. And including renewable, including -- but basically in the all energy space. It's not that we are plus integrated to our own line of business, like shipping is for our own shipping and transportation from U.S. for our own at. So now coming to, I think, I'm done with most of the things except unless you -- did I miss anything? So this is the macro picture. Now we want you to know that that gas is more lucrative for us today in Indian context, gas is more lucrative. So we should call ourselves gas and oil company, not oil and gas. . And also, no, what are new gas comes. These are all -- even from ATM block, like the DSS is free pricing, DSS which will come next year in market price. It is not even governed by 12% slow. So 12% scope is only for nomination field and any well, like this project of BOD is in the nomination block. And therefore, entire production is going to the new well gas. New well gas is 12% of group prices. So this want you to be mindful and therefore, ONGC gradually is becoming more greener company through more gas. So no. So now that is also a strategic fit for the world, that possibly only one oil and gas company in the world where -- which produces more -- a little more gas than oil. So this is something that, as you know, oil production of the world is around 4,000 million tonne, 4,000, and gas production is 2,500. But we are at almost matching oil and gas is equal and gas is a little more than that. So it is something and gas is more valued fuel in the light of what goes on in fact. In fact, we will be very -- pursuing the market. In India, gas demand is galloping in Maruti alone is selling roughly 25% of its is the CNG vehicle. So car manufacturing. So because CNG is a natural and CNG demand is viable at 12% price. So actually, be more greener and it is also gas, we can produce more and more that confidence we have. So while I'm not saying we can't produce. But while growth in our view will be -- unless we have some big discovery will be muted. But gas growth will continue to be. So we are -- this impression that ONGC will not grow is not correct. So we'll grow more on gas side. So that factor, you should keep in mind. With this, I'm done and then we can take questions. .

[Operator Instructions] The first question comes from Nitin Tiwari from PhillipCapital Limited.

I really appreciate the elaborate initial brief that you gave, a very clear picture. Sir, my question was with respect to gas production. The first question is with respect to the gas production. So as you mentioned, I mean like know your increment focus is on gas, and you spoke at some length about it. But I mean, what I wanted to point out is that surprisingly, over the last 5 years, our gas production is on a continuous decline despite whatever investments that we have been doing and despite the guidance as well. So if I remember right, our earlier guidance during this year was that by January, the technical partnership with BP would start showing some results. And we'll also have incremental gas coming in from government offshore as well as like other fees directional offshore, which will contribute about 5 MMBtu by end of March. So I just want to understand what is the status of these projects? Was there any incremental production that came in and the decline that we saw in this quarter was despite this production coming in? And in that backdrop, what is the guidance for FY '27 and FY '28 for gas production for us and also for the JV. So that would be my first question, sir.

So BP in the MH field at Mumbai, that is TSP 1. There oil on baseline target, oil is 100%. We have disclosed that yesterday. And gas is around 108% or 109%. So gas for the has gone up. But as I told you, oil and gas production, some -- there is some small operational parts, and there is largely facility part. Facility part is coming up. So it is first year itself, MH has shown a number. But first year was never supposed to be a great number because facility laying will take around a minimum 1, 1.5 year to go. So that is -- but still where BP is involved, production is more compared to what we have targeted. Now coming to DuDP, DUB, yes. In March, DUDP, we were targeting March. In March, we owned -- we have started opening the well. But try to understand that it is not like -- it's something that you start today everything to open 1 day. We have -- we go through a process. So there are 15 and all the platforms, all the 4 platforms are fully ready to receive gas. We are opening gas, four we have opened -- and we have to -- the remaining 11 we have taken. So we -- whatever we had committed to you, we will start monetization from March. I think we have honored that, okay? Now monetization commencement doesn't mean that full thing coming on in 1 day. It is a start-up plan, which takes around 6 to 7 months. And that process we have to go through. So in this monsoon, we hope to open at least another 6 to 7 wells. So now for monsoon is starting now, the fifth rail is under opening now. Then 6th will come, seventh will come, eighth will come. There is a process and sequence to be followed for gas production. And because you have to synchronize with the pressure balancing you have to do, the well doesn't get overpressurized and all that. So there are technical issues there. So we are sticking to that plan. That monetization commenced in months. Hopefully, by September, October, we should have opened all the well. But again, I just want to tell you peak production doesn't mean that after you have opened all the wells, then peak production happens. Peak production happens on the reservoir maturity. So after pushing some gas out and all that, then again, interventions are made, and therefore, peak production may be a little further away. But all the wells, we are hoping to open by after -- just after monsoon. It should be completed after monsoon so that September, October, we should be through with all the wells opening. And opening should give us around 3 to 4. Did I answer your both questions? .

Yes, I mean you did answer to some extent. I also wanted to have the guidance for '27 and '28. And I do appreciate the complexities in these projects, sir, and really appreciate the good job that is doing, but I was only going by the guidance that you all gave -- I mean, at the beginning of FY '26.

I'll tell you. I'll tell you, we gave a hint in yesterday I've read it, though I didn't write that people have written it well. They have said very clearly that the Gulf war March many projects were delayed because of the Gult war. One of our major pipeline replacing project by a by Saudi or Dubai. So naturally, that project got kicked because of the Western Asia issue. In fact, geopolitical issues, then similarly, there are some projects, which were linked to real availability and all that. That was also because of somebody is not getting energy. So everybody asked for a deferment of time. But still, you should appreciate that fortunately, new BP were chasing very badly, so we got on time. But other projects, little delay here and there. And also, we should be mindful then we connect the new projects with the old wells, we have to -- there is a process to be followed in which a certain portion of time, the production suffers, because it is a partial shutoff or major full shutoff so that we can do the activity. So some part you can attribute to that. But you can see, last year, ONGC stand-alone gas production, it is almost flat. It is not 0.6% negative only, if I remember correctly. If you are hinting at our JV partner at Vedanta and all that, that figure I can't talk, but ONGC stand-alone, pure stand-alone means ONGC operated blocks, not ONGC jointly on box operated by someone else. We are almost oil may be minus 1%, gas, we are 0.6%. So almost we have flat level. number was supposed to come from April only.

So I was referring to average production as well as the quarterly production. So in this quarter, if we look at it, our gas production is down by 2.5%. And I mean, yes.

I gave you the reason. Our -- their projects are under commissioning. Do you -- many things, as I told you, wells are under opening and all that. So we have to shut other wells to gradually open these works. Anyway, these are technical things, which may not worry. But whenever you commission something new, they'll be temporary delay. So this is something this quarter is mainly attributable to that blip, 2% minus.

So pardon me if I mean like if I came across somewhat, like I don't know, but I'm trying to put it as mildly as possible. But if we look even KG 98/2, the project is not dead, I mean it's severely delayed. I mean we have been guiding in almost every quarter. .

Yes, first of all, gave. We gave you a hint that had a geological production, right? Gas wells are yet to be open because because gas wells, which could not open because platform was not ready. So platform was ready and platform got ready and then now connections are going on. So hopefully, we are hoping that July, August, maybe we'll open those wells.

Great, sir. I mean, I just wanted to have the guidance, therefore, for '27 and '28. I mean, in light of what about opening up wells in...

I can't give you exact numbers, okay, that you have to. We can't give you because unfortunately we give you a number and they will cling on. And then you ultimately blame us we are in E&P. It is called expression and production; It is always .

We're not going to hold you on to any specific number. If you can help us with some broad guidance, that will be helpful, sir.

Broad guidance I gave you. It will grow. Gas will grow. let us ask some other questions to come up. Okay.

My second question is a bookkeeping one sir...

[Operator Instructions] The next question comes from Pranita Shetty from Morgan Stanley.

Yes. Really appreciate the detailed brief you gave earlier. It adds a lot of flight to what we are trying to understand for the company. Sir, I had two questions. The first one is relating to discoveries. Could you throw some additional light on the discoveries, what you mentioned earlier, the 3 discoveries in the brief what you had mentioned? Could you just add more clarity in terms of what is the production -- potential production you're seeing there? And what could be the CapEx for these assets?

So these are under appraisal, okay? All I can say that the well discovery flow rate was to my mind, for Western Offshore was fantastic, because the 2, 3 discovery that we have quoted you yesterday, 2 in Western Offshore and one in Assam. Both the discovery is a fantastic flow rate it has shown. The only thing is unless we put some more wells nearby and assess the reserve size, we can't give you a definitive figure like how we will produce. But we are now very bullish on these 2 discoveries because it is completely a different area. It is -- we -- and frankly, we were not expecting this flow rate. So naturally, but we can't tell you the quantity because unless we have 1 or 2 more exploratory appraisal wells. In our industry, we appraise discoveries weight. Then after discovery, then you appraise by drilling some more wells to get the area. And then you assess the quantity. Once you assess the quantity, then you develop the field development plan. So then you decide the CapEx. But all I can say at this point in time by Western Offshore standards, it looks very, very promising. But quantity, I will stay away from because no, because that is not correct on my part to say without appraisal. .

Sir, then you'll be adding, let's say, 3 exploratory wells there and then giving us a more..

Number I will give you then. We are sure that it is worth developing. I can make that statement. But what is the reserve size and what will be the facility size will come to know only once we have the appraisal done. Appraisal done means 1 or 2 more wells. And it is already under plan. So it must be happening now.

The next question comes from Randy from Goldman Sachs.

Am I audible?

Yes, you are audible.

Yes. Yes, yes. I have 2 questions today. So for my first question, could you share some thoughts on why the government has not implemented any windfall taxes recently instead of higher oil prices and whether there's any expectation of such going forward? It is my first question.

Yes. This is you should ask government, not me. But see, we are damn either side. do then also you are damn, your last time SAD government applied, everybody said government is interfering too much. This time then government has not applied to, then also you're not happy. But it is good for ONGC because even when the crude price went up to 140, you can -- what you can infer from here, I think I would imply to infer you that way, that government doesn't want to interfere with E&P sector. It wants to give full freedom to whatever because you know our import dependency. They want every drop to come out and whatever they can do, they have done. In fact, that's not as is saying because the government has appointed me, because I'm saying because they didn't apply despite so much of crisis and so much of loss to OMCs. Otherwise, we were the first fall guy to compensate partly by giving, say, the other or even earlier times, we have given discounts up to INR 2 lakh crores in the previous time when '13, '14 government didn't collect, but we directly gave the discount to our crude purchases in India. So this time, nothing like that happened. We got flat Brent even when it was $140, we also got $140. So you should be happy as an ONGC investor.

Yes. Yes. Okay. So for my second question, one of the latest filters of the proposed APM gas pre-regulation from January in 2027?

Pricing regulation as of now, I can't say about government. Government for this year because it is supposed to be reviewed this year because it is committee as for review in '27 , but in a way, whether that review is required or not, that is a million-dollar question because we have already leased $7 and $7 gas is our kit next year will be worth of total gas will not be more than 50%. So if they review well and good. If they don't review also, we have new well gas. The new well keep repairing old welll gas. And so therefore, this will -- this journey of 10% to 12% migration each year will happen. So I think if we can revise it right now, we'll be more than happy, but actually, directionally, it is clear that government wants to compensate very handsomely to gases. can't say on behalf of government at what government will do.

The next question comes from Varatharajan Sivasankaran from Antique Stockbroking.

We're all quite enthused the government support in the form of a reform in royalty front. Is there also a plan from our side in terms of increasing exploration as development CapEx given this backdrop?

So a little premature, but intention, at least what we understand from various sources that intention, of course, it is a government to take a call finally is that how much will support. But it looks like there's big support for exploration and production came from Union Budget. .

sir, Are we looking at increasing our CapEx, sir, like now from the '24 now that we have some...

That depends on what contribution gets announced from there. We'll adjust our figure accordingly over the year so that we give you -- we continue to give you a handsome dividend. .

Secondly, in the case of geographies and the new reserve replacement to ensure you have given 2P reserves. Unfortunately, we don't have the baseline 2P reserves for the entire company to compare ourselves with. So if you can provide that both oil and gas?

That will give. Subsequently, we'll give you . Subsequently, after this call, we'll share with you, because the baseline last year addition is 44%. In fact, this year addition, 25, '26 addition is 44 million tonnes. We produce roughly 40 million tonnes of oil and gas. So 4 million tonnes is additional. So you shouldn't be happy about last year's performance. Base year will be the previous year performance. So god has not given a size in the back. We'll share with you. This month, we'll share with you.

The next question comes from Amit Murarka from MOSL Financial Services.

This is Amit from Capital. On CapEx, like could you give a number as to what can we expect for FY '27?

See, it remains generally 30 bound, because now 33%, some will spill over, but it should be anywhere 30 to 32, something like that. But if more CapEx being more production comes, we'll be happier to spend more. I'm talking about E&P CapEx. Non-E&P CapEx is separate because now 1/3 E&P CapEx goes in non-E&P side. We are not going as that ratio, but this is about E&P CapEx.

Sure. So ballpark we see a 33 E&P and then another 10, 11, non-E&P?

Yes. If the good opportunity comes, then you can take it because we have not currently no plan, but if some new business opportunity comes, we'll invest there.

And what -- can you provide a KGD6 oil and gas run rate right now? So KG 98/2 oil and gas 100?

So how much is? You have the numbers? .

98/2.

98/2. Yes, current is 2.3 in the stock. Once we open the well, it will be 4 or 5. It could be . As about the current production. So 2.3% gas and around24,000 4,000 oil, Yes. .

So I see that both have actually been dropped quite substantially from where we were earlier in the year.

No. In fact, and I told you that we had surprises. In fact, it is compartments, but we've got dilution now in hand. So we have to implement it. So it should be back because the reservoir proved to be different from what we thought. .

So what is the run rate you're targeting now?

It should come back to the same level, but it will take around a year or so minimum because we have to drill some wells.

The next question comes from Raj Gandhi from SBI Mutual Funds.

Sir, just again trying to get some headway on the CapEx side. Let's say, as you mentioned, you've drilled 500 wells out of which 100 was exploratory. So what should be that annual run rate in the next 2, 3 years, given the impacts on exploration that we are trying?

It depends on what government support comes.

Okay. . But outside of deepwater, how should we think about it? Maybe deep this..

Outside of deepwater, we'll continue to be a today, see roughly -- we -- last year, we drilled -- how many it is deepwater -- 8.

4 Wells.

Four wells, but deepwater 1 well is equal to 100 wells of onshore.

Got it. Where we are coming from is largely, but let's say, if we were to see Oil India, they were at INR 4,000 crore run rate some time back. Last 2, 3 years, they have increased and now they are guiding at about INR 10,000 crore run rate. So from an overall CapEx perspective, you've seen about a 2.5x increase purely on the stand-alone oil and gas side. So which is.

Sorry for cutting a short , because we can't afford it. We can't -- INR 30,000 crores, we can't take it INR 5,000 crores. Oil India possibly can afford it. I won't comment on that.

Sure. So which is where we are trying to get that where will ONGC end up with on a run rate basis given the impetus on exploration. So...

ONGC's own budget and almost 31, 32, okay? Depending on its external support comes, then that much extra will do. Internal support, say, we'll do around CapEx will be around INR 30,000 crores, INR 31,000 crores.

The next question comes from Vikash Jain from CLSA India.

I have a few of them. Firstly, on dry-well write-offs. This was possibly your biggest quarterly write-off. Are there elements of some 1 or 2 real large wells? And in terms of your overall exploration spend of the INR 33,000 crores, how is that likely to be in FY '27 versus how it was in FY '26? .

So our exploration spend is typically INR 8,000 crores to INR 10,000 crores, correct, per year. And I told you that is likely to -- just one sec. So one answer is that we'll keep at same level. But this year, in your last quarter write-off, it is not -- this abnormality has come from a very, very paper process, because we had a write-off. We had a block and which government took it away and where we had DSS IV. So we had drilled something some well. And since we did not develop as they were a commerciality issue. So government took it back. So in fact, we had to write it off because the asset itself went off. Therefore, we had no choice, but that was around INR 1,500 crores -- INR 1,800 crores. So our normal -- whatever was there is normal. This one exceptional item came. I'm not like exceptional item inclusions. One-off items. Otherwise, you can be rest assured that you are in safe hands.

Of course, sir. Just I fully appreciate the challenges that and uncertainty that exploration brings in an E&P brings in. But nonetheless, with our best understanding and best cases, from what you have said, just to kind of build on to that. You said by September, October, all wells of the Daman project will open up. And then soon after is when we will get to peak production. Should we take that as by December is a good guess on when you should get to about what is the big production 5 MMSCMD, right?

Peak production typically is 1 year away, 1, 2 years away, correct? Minimum 2 years away because of the reservoir gets time to mature because the flow and all that. So typically, different fields have different time lines. But definitely, you can expect that good quantity will start flowing by Jan. .

Okay. So I mean peak will be still away.

But peak to average will be how much? That is your largest reservoir guys to answer.

The peak production is still more a 2027 story or '28, is it '27 for Daman?

'27, '27, you can take it. But peak is then a statistical number. 0.08 changing is also peak. Peak is when peak will come, it is normally , a field has a gas field has a 15-year profile, suppose it has third, fourth year, it will peak, then remain plateau for 7, 8 years, and then it will decline. So this is a typical growth this cycle of a well.

And the expected peak here is about 5 MMSCMD. Is that roughly a number that we are looking at?

Roughly, roughly . Because this project has some additional facility, which creates more production from existing wells, other project wells too because of the suction that it creates it is a purely technical issue. So -- but you can -- from this project, you can expect 5. 4.89 to be precise.

The next question comes from Gagan Dixit from Elara Securities.

Thanks for giving the very elaborate description about the recent developments in the oil decision. Sir, my question is about your -- about the CapEx outlook, sir. Now sir, given that government is giving lots of incentives to the upstream companies. So do we see the possibility that at least that CapEx will meaningfully increase in 2 years because that's the expectation I see proceeds from the government side? Why I'm asking because I think 2 months back, some new scale in the media that ONGC closed a $20 billion global tender for the deepwater rig for the -- at least for the 4 to 5 years. So that's what if you can throw some highlight also if CapEx trajectory or changing that over the next few year, sir? .

Okay. Okay. So first of all, it never said 20 gigs over what period of time. So it can be 20-year 1 rig each year, okay? So second, I don't know from where they picked up that news, but I will not comment on that, but I can certainly comment on 2, 3 facts that for next 2 years, we have to build around 16, 4 plus 8, 12 plus 3, 15, 16 wells. So I can give you 2, 3-year visibility. And that - those will be -- those will be drilled from our conventional budget that every year we have been spending. Most likely, big money from government will start coming from '27 '28. '26, '27, I don't see any big spending coming on government head because we have to -- you must have seen as already -- government has already started picking up the bill because government has already put to set that One is for entire Eastern offshore 2D survey, which has also went to be thousands and thousands of crores. And second one is day for study, it came 3D seismic reprocessing. So government has already started picking up seismic and well will not come next -- this year, this I'm sure, because the seismic will take some time. And based on seismic results only government will decide what to assist, how much to give in which well. So I'm sure that policy let government documents come out it is government is not yet official. All government is official about this. They are floated 2 tenders from their kitty from their office for seismic of big seismic of big areas. So right now, this year, we will fund from our own budget, which is a conventional our exploration budget because this year we have provided for, and we have been providing for years together.

And sir, my second question is about -- I mean, beyond this MH Mumbai High Daman. So in this financial year, what were the -- I mean, the prospects where you are working? I mean, where do you see the potential at least see some possibility of some exploration awaired sir? Where we do see the very high seismic studies working on the..

So basically, we have 2/3, 1/3 there also. And you see third is in ONGC E&P, 2/3 is offshore and 1/3 is onshore production-wise. So in fact, the some numbers will come from Gujarat because Gujarat, roughly, we produced 4.5 million tonnes. And some efforts are on for some -- because every year we explore and some new wells are found, so that will get produced. But also enhanced oil recovery of Gujarat assets are very high, because we expect there, but these are all -- we can't quantify it, unfortunately that's how much and all that. And but definitely, we will do everything possible to increase production, but how much all that we can't say. But two things I'll just reiterate that we have great hopes from some of the particularly after this 1 last year discoveries, that we'll try to develop as fast as possible.

And sir, my final question about how much is the exploration rate that's expected to deploy this year as compared to the last year, sir, especially in the offshore?

So that question is very dangerous for us, because what happened at the moment we answer, catalyzation happens. I hope you should not ask this question because when supplier side gets all the information and then then we end up paying more. And that certainly you would not like because you are also taking good share in your profit. So please do not encourage this a number of rigs and all that. We play card to suit the market. So we can't play up the market by disclosing our numbers. So in fact, the only thing I can share you ONGC is the first company in the world whose tenders say now that minimum 1 rig, maximum, we will decide depending on price. I think whether you have seen this pattern or not, last 3 tenders of rigs is mentioning this language. So we are also becoming unpredictable like our reservoirs. You got my answer or not? So what I'm trying to say rig will we will decide the rig depending on what price it gets quoted for, because after all, we are taking our budget. .

Next question comes from Probal Sen from ICICI Securities.

I hope I'm audible?

Yes, sir.

Yes.

My first question was most regarding OPaL. You mentioned that you're obviously on the way to manufactures the 2. Can we get a little bit of granularity in terms of how much would the cost once we have to start importing. I mean, what I mean to ask is that if.

I'll answer you. I'll answer. You'll get your answer very quickly. In fact, imported ethane is $9, even today because $3 is Henry Hub, 1.15 you multiplied and then you have liquefaction and transportation. So typically $9 were home. Against that, today, we are buying LNG from open market at $18 and new well gas at OPaL was all outlined at $14. Today, this month, new well gas is $13.91. So you got your answer in this figure?

Right, sir. If I ask a small follow-up then, what are the time lines we are looking at where we can sort of is going up?

Our ship will be here in '28. The moment we have shipped, then we have -- import will start. Ethane quantity is not a problem in U.S. Only thing ship is not there. The ship Samsung is ordered on Samsung. delivery is December December '28 is the delivery.

FY '29 is you can sort of start to.

Exactly.

And my second question is on Yes. Sorry, sir. May I ask.

Please go ahead.

Other question was with respect to the Western Offshore and the entire CSC. If I can try to understand what was the decline rate for that entire region, even a range and what do you sort of expect it to be, let's say, by FY '28, when you said that at least 1 to 2 years of work is required or meaningful results to start coming through. So now that the entire Western Offshore has been handed to or it's going to be worked on by the BP. By FY '28, '29, given that it is 60% of oil and 70% of gas, can we see a meaningful arresting of the entire decline rate for ONGC is that a fair way to look at it?

Yes. Yes. Answer is decline rate not decline the arrest and further growth. That is the commitment from next year. Okay. Okay. . That is the commitment in the tenant itself. The decline rate declined stops compared to the last year base and growth happens. We have been struggling with the decline for last -- I'll give you a number, which will be of interest to you. And our ONGC peak production was in '95, '96 investors, which was 39 MMTOE, oil plus gas. Last year, we have produced 26.18. It means roughly 1/3 of volume declined in the interview period of 30 years, okay? Now this is likely to go up from next year, okay, with peak '31, '32 . I hope I clarify it.

The next question comes from Vikash Jain from CLSA India.

Let me just ask -- sir, let me just ask the questions quickly so that we have not cut off because these are some very important questions. Firstly, is we were talking about Daman itself. So your 3 MMSCMD additional that you asked for new -- that you suggested in new well gas going from 9 to 12. Should I assume that this is largely what one should possibly come, although it will peak next year. But the 3 MMSCMD roughly is what you hope will come from Daman?

Yes, Minimum 3.

Minimum 3 will come -- and the -- on KG Basin, just to kind of -- I know there's a lot of language, the one that was there in press release, something that you've kind of put in as well. Just to kind of understand that in a more clear way. The geological challenges that you faced or the surprise that you encountered was largely linked to the oil part of the liquid part of the production. The gas bid has just not started because of the production -- the delay in the platform. So the oil part is where you are going to handle that and you've kind of figured out a solution, you'll have to possibly drill more wells. And maybe in about 3, 4 quarters, you expect oil production to again go back to the kind of expected levels, which it was. But the gas bid is only going to pick up from out of July, August. Is that understanding correct?

Yes, 100%. We are absolutely right.

And so the current gas production, which is at 2.3 MMSCMD, that, once you even more wells are added wells were added in July, August, how should I expect that to kind of ramp up? Should I expect that by the end of this calendar, this will go to 5 or so or even higher? And then when should expect?

So having experienced 98/2 predictability is low. So -- but definitely, you can -- it can vary anywhere to anywhere. I'm saying minimum to max. So that number I will leave it to you to guess. But definitely, it will be at least the minimum size also should be handsome for you.

Okay. So many.

Numbers, no boss. . Last time we gave you a number and then you're all the exact number and all that. But you have to because exact number we can't give, but we have some view, but geology is geology. God has created geology, man has not created. So we'll have to wait for July, August to see.

The next question comes from Sabri Hazarika from Emkay Global.

Just two questions. Firstly, in terms of your production uptick possibly Daman and KG-98/2 gas. So both of them will probably add up this year and DSF I from next year onwards. So against that, what could be the natural decline for the existing assets.

So yes, what you said is correct. This year, basically 3 major thing, what DSF is next year, but 98/2 gas this year and this year. You are right. And plus, you should also 1 or 2 MMSCMD gas, there are multiple projects going on. So those we are not -- with those we don't count because that's not counted in what we have explained to you.

Right. But this is against decline of 7% to 8%. Is that right?

More or less, yes, because our natural decline, it's 7% to 8%, but we can say 3% to 4% by interventions. So 2% to 3% number I gave you that says because it's almost 95 in 30 years, we lost 1/3. So you can derive your own inference that how much we lose. Roughly 1% or 2% every year we lose. After setting off our -- all the efforts of natural decline, 5% to 6%, we make up by all the means and then 1% or 2% further first, unless new field comes in, and new field came like DoDP, Newfield, GSF is a new field. Next year, we'll be a bigger field than this. So these oil fields will add. But old fields with old interventions with all the conventional interventions, it is very difficult to hold on even the current level. So naturally, ONGC is one of the -- I should say that we are basically 7% to 8% decline is always kept at 1% to 2%. And that is something ONGC should be proud of.

Got it. And second question is on this Q4 results. So C2, C3, C4 production as well as relations earnings that has fallen significantly. Was there anything exceptional during Q4?

You know the reason because of the 3 reasons, in fact, because of this March, we took a heavy because every allocation got diverted towards something else. So naturally, WAP got reduced because the gas got diverted for making more and more LPG and LPG prices are lower than crude. OPaL operated only at 60% in March. 60%, less than in March. .

So this will continue in Q1 also till the time that entire allocation thing gets normalized. Is that right? .

OPaL is now working at what level? .

But you are planning to start the open by this month.

Right now at 60, but I'm told that it will be at 80%, 85% within 4, 5 years because something has been lined up.

And even the stand-alone C2, C3 C4 will recover or that will remain at the Q4 levels only or March level? . Yes, both the things are completely connected the entire C2, C3, C4 reported in the stand-alone business goes to OPaL only?

C2, C3, C4, we're not going. We are not running on gas as of now.

He's not -- he is asking about the WAP of. So some quantities get diverted because for LPG. .

That we do not know.

That we do not know until the West Asia crisis is over.

Next question comes from Vikash Jain.

Sorry, I keep getting pushed out. The one thing that you missed?

You get pushed out or you chose to get some other fall and therefore, many times, we also do this.

The operators to shut me out. So Brazil is that -- there's some update there as well in the Sergipe Aligos thing. So could you please share that bit as well? And also on the?

Yes. Now I'll ask MD to explain.

What is the question? What is the Yes, BMC 4, as we call it, it's in a basin. We had an exploration -- we had an exploration success some time back. And now FID has been taken. SCS has been contracted, and we are going ahead to the development. So we should get 1.3 million tonne net to OVL additional production by 2030. oil in '30 and gas '31.

1.3 million tonne oil equivalent, you said. Is the net share? That's for the 25%.

Per annum.

Yes, that's the 25% for you, right? .

Yes. Yes, please.

Okay. And sir, DSF, that you said could add 4, 5 MMSCMD to gas production, and that will be free pricing. So that's roughly when are you expecting that? Is this 2020 -- is it FY '28 or...

Yes. FY '28 It can't get delayed further. It has got delayed for because different reasons. But definitely, '28, yes.

Just ramping up is -- this ramp-up is likely to be quicker because this is less complicated is geologically is?

Yes. It is a known. See, Western Offshore is -- so it is less -- is more predictable.

The next question comes from Nitin.

Again just a bookkeeping one from my end this time. So our operating expenses are higher in this quarter and also for the year, you did mention the GST bit. But what is -- are there any one-offs in this quarter, particularly? I mean, as I guess our regular run rate of about INR 5,500 crores to INR 6,000 crores, we are at almost INR 9,000 crores of operating expense. .

For Q4, the GST on royalty, which already DHR additional charge has already explained, that is around INR 235 crores and INR 262 crores relating to KG 98/2 umbilical written-off after the opinion of ICAI, we have to make the provisions for old outstanding recoverable also INR 257 crores. And one provision for stores and spares around INR 280 crores. These are the exceptional items or one-off items which resulted in Q4 operating expenses higher.

So if all this has added that's about INR 10,000-odd crores. I mean, but we are -- as I said, I mean, last quarter, operating expenses were INR 3,500 crores, now we are at INR 9,200 crores. So is there anything else that we are missing over here?

GST impact as Chairman sir has already told from 12% to 18%, it has increased. And the other thing is exchange rate fluctuation, which depreciated by 11% for that is also impacted.

And lastly, before I let go, if I can give us a regional breakup of your CapEx spend, if that's possible. How much are we going to spend onshore and how much offshore specifically in Western Offshore. And how much of this -- you've given out the exploratory number, how much of this would be in development and IOR/EOR program, the INR 32,000 crores we spoke about .

70-30 is offshore, onshore ratio.

Okay. Any number you can give me, sir, for Western Offshore? .

Largely 70%, you can say that it is Western Offshore only because we have hardly 1 or 2 wells maximum 2, 3 wells in 98/2. So most of the money will go to Western Offshore only because Western Offshore is still -- is more relative and productive .

Next question comes from Mayank Maheshwari from Morgan Stanley.

I was just focusing on the cost side. You had a great reserve replacement ratio this year as well. Now in terms of cost structure, if I was to kind of think about you've been highlighting on how you're focusing on reducing operating costs, specifically and CapEx cost. In a dollar or BOE basis, can you just give us a sense of what was the region of in terms of cost-saving initiatives that helped you in fiscal '26? And what are you thinking for fiscal '27? And specifically with the BP tie-up, is there any cost savings that we should be thinking about?

So we have INR 5,000 crores planned cost phase. Then we have another INR 5,000 crores we'll have to convert into per barrel.

500 million for 40 million sir?

$500 million for 40 million million tonnes. So 40 million tonnes.

$28 per BOE roughly. If I may add, many of the questions that you have been asking all of you have been asking a pertinent and other ship of MD because I'm seeing the international part, when you look at the Indian part and we track all this in rupees, there's a discount because of when you see spend and in dollars and these accounts are in rupees, so rupee, there has been a significant depreciation. So these numbers become different when you look at it. So that should be kept in mind. .

That's why I was thinking about it more from a dollar per BOE basis rather than rupees or anything of that that on a per unit product perspective?

Discount the depreciation dollar rupee depreciation, because we had some INR 5,000 crores is the Indian rupee we had said. So most of it, we have realized almost INR 4,000 crores, but we got negated by 2 things, that is dollar exchange rate and GST. 12 became 18%. But we are on course, but we will continue to do. We have another INR 5,000 crores lined up. So it will take around a year or so more to realize because the effort you make today, result will come later. So the cost side, we are now comfortable.

That would be the last question for the day. Now I hand over the floor to Shri Yogesh for closing comments.

Good afternoon. We hope we have answered all the queries from the participants. In case of any further queries are there, they can reach out to our Investor Relations. I thank Chairman and CEO for addressing the participants and answering all the queries of the participants. I also thank MD OVL, DF OVL, and additional charge finance ONGC and all my senior colleagues for participating and also all the participating participants for participating in this conversation. Thank you. .

Thank you. Have a great day. Thank you.

Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Door Sava's conference call service. You may disconnect your lines now. Thank you, and have a pleasant day.