India ONGC unlikely to buy overseas oil, gas assets at current prices

NEW DELHI: India's top explorer Oil and Natural Gas Corp is unlikely to buy overseas oil and gas assets at current prices of about $45 a barrel, its finance chief said on Wednesday.

Its overseas investment arm ONGC Videsh (OVL) has already seen a decline in profit, as some of its acquisitions, such as Imperial Energy in Russia, were made when global oil prices were above $100 a barrel.

"...prices are stuck at $45 ( per barrel) so any acquisition should be made at significantly lower prices only," Subhash Kumar told an analyst conference.

He said OVL is comfortable with oil prices remaining above $45 a barrel, as $40 a barrel is the lowest price at which the company can make a profit.

OVL has a debt of 420 billion Indian rupees ($5.74 billion), with its long term borrowings backed by ONGC. Its profit in the last fiscal year to March 31 declined by about 73% to 4.54 billion Indian rupees ($62 million).

Kumar, however said, ONGC will help OVL in raising funds if the acquisition is seen adding value.

Separately, ONGC sees an almost 19% cut in its capex for this fiscal year to 260 billion rupees as pandemic-related lockdowns have affected some of its activities.

Oil companies across the globe have cut their spending plans as the pandemic has driven down oil prices, fuel demand and hurt supply chain.

He expects ONGC's annual crude production to decline by 3% to 22.69 million tonnes in this fiscal year while gas will be almost flat at 24.89 billion cubic meters.