ONGC plans capex of Rs.290 billion for 2017-18

Investment to be made towards development of offshore fields

by Dolly Basantani

Oil & Natural Gas Corporation (ONGC) is planning to spend Rs.290 billion during 2017-18 to develop its offshore oil and gas fields.

Although the capital expenditure planned for 2017-18 is similar to that of 2016-17, the scope of activity would be more as the cost of services has gone down. For example, the cost of rigs and many oilfield services have fallen by about 25-30 per cent in the last couple of years due to weakening in crude oil prices, benefitting explorers and producers.

This capital expenditure of Rs.290 billion is exclusive of the amount of Rs.80 billion that ONGC has to pay for the purchase of Gujarat State Petroleum Corporation’s stake in the KG Basin asset.

For 2016-17, the capital expenditure target is set at Rs.293 billion. Of this, around 65 per cent has been spent during April-December 2016. This is quite less as compared to ONGC’s peers that have already exceeded their annual targets.

Indian oil companies have been on a spending spree this financial year with all state-oil firms making a combined investment of Rs.780 billion in the first three quarters, about 90 per cent of their annual target, on drilling new wells, building processing platforms, expanding refining capacity and fuel supply networks.

Most of the investments planned for 2017-18 would go into offshore projects off the West and the East coast. Daman, Bassein, Vasai East and Gamji off the West coast and Vasishta and Nagyalanka off the east coast will gobble most funds. A small investment would also go into the development of the deep-water block in the KG Basin, which will require a large investment in 2018-19. The onshore blocks of ONGC too would receive a small amount.

Oil producers are heavily investing in oil & gas in order to boost domestic output. This is very much needed as India relies on imports for most of its oil and gas requirement. More than 80 per cent of India’s consumption is met through imports. The government wants to reduce this dependency on imports. It targets to reduce the proportion of imports to two-third of consumption by 2022.

References
1. http://economictimes.indiatimes.com/industry/energy/oil-gas/ongc-plans-rs-29000-crore-capex-for-next-fiscal/articleshow/57195355.cms
CMIE STATISTICS
Unemployment Rate
Per cent
5.5 -0.1
Consumer Sentiments Index
Base September-December 2015
94.4 -0.4
Consumer Expectations Index
Base September-December 2015
96.2 -0.3
Current Economic Conditions Index
Base September-December 2015
91.4 -0.5
Quarterly CapeEx Aggregates
(Rs.trillion) Mar 16 Jun 16 Sep 16 Dec 16
New projects 3.31 1.54 2.34 1.42
Completed projects 2.26 0.90 2.15 0.76
Stalled projects 1.04 1.32 0.35 0.44
Revived projects 0.63 0.42 0.51 0.17
Implementation stalled projects 0.92 0.50 0.57 0.79
Updated on: 24 Feb 2017 12:20PM
Quarterly Financials of Listed Companies
(% change) Mar 16 Jun 16 Sep 16 Dec 16
All listed Companies
 Income -0.2 -0.9 2.1 6.4
 Expenses 0.9 -0.4 1.8 6.7
 Net profit -29.1 -3.5 15.3 36.4
 PAT margin (%) 4.9 6.9 7.0 6.0
 Count of Cos. 4,397 4,354 4,314 4,228
Non-financial Companies
 Income -2.1 -2.5 0.6 6.1
 Expenses -3.9 -2.9 -0.2 7.6
 Net profit 4.8 10.3 27.5 20.5
 PAT margin (%) 6.2 7.4 7.0 6.1
 Net fixed assets 3.8 -9.2
 Current assets 3.1 8.1
 Current liabilities 10.6 11.5
 Borrowings 6.7 3.1
 Reserves & surplus 7.9 8.6
 Count of Cos. 3,456 3,426 3,394 3,337
Numbers are net of P&E
Updated on: 24 Feb 2017 12:28PM
Annual Financials of All Companies
(% change) FY13 FY14 FY15 FY16
All Companies
 Income 11.9 9.3 4.3 0.2
 Expenses 12.1 9.2 4.3 0.3
 Net profit 1.0 -4.2 2.7 -12.1
 PAT margin (%) 3.6 3.2 3.3 3.4
 Assets 14.1 12.2 8.9 7.7
 Net worth 9.5 9.4 8.2 6.2
 RONW (%) 6.8 6.0 6.1 5.7
 Count of Cos. 23,087 20,259 18,916 14,317
Non-financial Companies
 Income 11.1 8.9 3.3 -1.1
 Expenses 11.4 8.6 3.4 -1.9
 Net profit -8.9 -5.6 -3.6 14.1
 PAT margin (%) 2.4 2.1 2.2 3.1
 Net fixed assets 12.9 11.3 12.3 10.8
 Net worth 7.7 8.3 6.6 5.0
 RONW (%) 5.4 4.8 4.8 6.1
 Debt / Equity (times) 1.1 1.1 1.1 1.0
 Interest cover (times) 2.0 1.9 1.9 2.1
 Net working capital cycle (days) 71 69 68 68
 Count of Cos. 17,721 15,860 14,813 11,415
Numbers are net of P&E
Updated on: 21 Feb 2017 3:48PM

Now download data directly into your worksheets

Low government spending and low consumer expectations to keep growth subdued

Modest increase in capital expenditure; no incentive to private players

Rs.5.34 trillion or 3.2% of GDP