ONGC Charts a Leaner, Smarter Future as Global Oil Prices Enter a ‘New Normal’

As the global energy landscape continues to sway between unpredictability and transition, India’s oil giant Oil and Natural Gas Corporation (ONGC) is quietly redrawing its playbook. At a time when crude prices are expected to stabilize in the modest range of $60–$65 per barrel, ONGC is charting a cost-optimization path that aims to do what few in the upstream oil business can — stay profitable in a low-price world.

For decades, ONGC has been India’s bulwark of energy security, a mammoth enterprise that has weathered oil shocks, geopolitical tensions, and policy reforms. But the next few years, company executives admit, are about more than surviving volatility — they’re about reinventing resilience.

ONGC's Roadmap Towards New Normal

“We foresee a stable average range of $60–$70 per barrel in the near to medium term,” said Pankaj Kumar, Director (Production), ONGC. “We are preparing for a future where $60 per barrel is the new normal, focusing on operational and financial discipline to maintain profitability and growth.”

The oil and gas sector has entered one of its most unpredictable phases. Demand growth is slowing globally, even as supply expands amid new finds and a rapid shift toward renewables. Over the last five years, crude prices have declined at a compound annual rate of 5%, signaling what industry watchers call the “era of cautious oil.”

For ONGC — responsible for nearly 70% of India’s crude oil output — the stakes couldn’t be higher. Yet the company appears ready. Rather than cutting back, ONGC is doubling down on efficiency, digitalization, and cost reform.

“Volatile crude prices are creating major uncertainty for E&P companies. ONGC’s response is structured and strategic, ensuring both cost resilience and production growth,” the company said in a statement.

The ₹9,300-Crore Efficiency Play

At the core of ONGC’s new strategy is an ambitious target — a 15% cost reduction across its exploration and production (E&P) business within two years.

The company currently operates at around $45 per barrel production cost, but plans to bring this down significantly through a blend of technological innovation, logistics optimization, and integrated project management.

To execute this, ONGC has set up a Dedicated Cost Council — a cross-functional unit driving both structural and process-level savings. So far, over ₹5,000 crore worth of cost-saving initiatives are already being implemented, with another ₹4,300 crore under active evaluation.

Key focus areas include:

• Offshore resource and fleet optimization

• Enhanced drilling and fuel efficiency

• Inventory and logistics cost reduction

• Route optimization and procurement reforms

“We are recalibrating our operations, investments, and efficiencies to thrive in a lower price environment,” Kumar said.

No Cuts in CAPEX — Confidence Intact

Interestingly, even as many global oil majors scale back investments, ONGC is holding its ground.

The company has reaffirmed its capital expenditure (CAPEX) plans for FY26, ensuring continuity in its major upstream projects across India’s eastern and western offshore regions.

“We are not planning to cut CAPEX for FY26. ONGC’s financials remain robust, and we have no immediate need to raise funds,” Kumar noted. “We will approach the market only based on project developments and funding requirements.”

ONGC has also clarified that it’s not seeking tax or fiscal relief from the government. “The government is already supporting the E&P sector in other ways. As of now, we have not sought any tax-related relief,” Kumar added.

Big Bets and Global Collaborations

ONGC’s future roadmap is powered by collaborations — both homegrown and international — that blend field experience with cutting-edge technology.

• Mumbai High Redevelopment with BP-TSP

Under the Technical Support Program (TSP) with British Petroleum (BP), ONGC is eyeing a 44% increase in oil output (from 45.47 to 65.41 MMT) and an 89% boost in gas output (from 70.40 to 112.63 BCM). This redevelopment alone could unlock $15 billion in incremental revenue over the next decade.

• KG-DWN-98/2 Field Revamp

Another major initiative involves BP as a Subject Matter Expert (SME) for the KG Basin project, which targets an additional 12 million metric tonnes of oil and 13 BCM of gas. The revamp involves a ₹13,000 crore capital investment across eight integrated sub-projects.

• Pipavav Supply Base Expansion

The company is also scaling up its Pipavav Supply Base (PSB) to handle nearly two-thirds of its western offshore workload, potentially saving over ₹1,000 crore in logistics and vessel efficiency.

• ONGC-BP Redevelopment (Phase I)

With a $400 million CAPEX commitment, ONGC aims to enhance recovery from mature fields using digital integration and advanced reservoir modeling.

Production Revival: Turning the Tide

For years, ONGC faced the uphill battle of declining output from ageing fields. But FY25 marked a turning point — crude production grew 1% year-on-year, reversing the trend for the first time in years.

In FY26, the growth continued, with 0.3% and 0.5% upticks in Q1 and Q2 respectively compared to the same period last year.

Behind this revival lies a mix of new well interventions, advanced subsurface mapping, and digital monitoring. ONGC plans to drill 100 new wells under Mumbai High Redevelopment Phases II and III by FY29, while accelerating exploration in new zones.

The Digital Push: Data as the New Oil

The oil business, once defined by rigs and reserves, is now being reshaped by data and algorithms.

In partnership with BP’s High-Performance Computing (HPC) centre in Houston, ONGC is digitizing operations using 3D-4C Ocean Bottom Node (OBN) seismic data and AI-based predictive modeling.

It has also collaborated with Palantir to enhance data integration, performance monitoring, and well design — a move expected to reduce project delays and optimize drilling outcomes.

The company’s digital roadmap is aimed at not just efficiency, but discovery — unlocking new reserves and enhancing recovery rates from existing ones.

In a bold strategic step, ONGC is planning to enter energy trading by setting up a crude trading platform by FY27.

The proposed platform — developed in collaboration with HPCL, MRPL, and ONGC Videsh Ltd (OVL) — will integrate ONGC’s crude sourcing and sales to improve returns across its value chain.

“The proposed trading platform will help ONGC enhance flexibility, improve logistics coordination, and optimize returns across the value chain,” Kumar said.

The move could unlock up to $1 billion in annual value for ONGC Group companies.

Future-Proofing India’s Energy Backbone

As the world pivots toward renewables, ONGC’s challenge lies in staying profitable while staying relevant.

The company’s current strategy — blending cost control, digital transformation, and global collaboration — is a clear attempt to future-proof India’s most crucial energy enterprise.

“Our focus is clear — operational excellence, cost competitiveness, and sustainable growth,” Kumar said. “ONGC is positioning itself to remain profitable and relevant in the evolving global energy ecosystem.”

In an era where oil at $60 is no longer a crisis but a baseline, ONGC’s roadmap might just become the blueprint for how legacy energy players can survive — and thrive — in the transition age.