Crude Oil will rebound, so we are investing: ONGC CMD

At a time when there is an subdued demand persist for Oil and Gas across the globe and crude oil price is making new low every fortnight, Oil exploration companies are not quite interested in doing huge investment into deep water and other assets. On the contrary state owned explorer ONGC doesn’t seem to be effected by this scenario and going ahead with all its plan of exploration and production and also acquiring assets abroad. Company is going ahead with its capex of Rs 35000 crore earmarked for FY16 and seems quite bullish. Asked about this optimism, company CMD D K Sarraf told reporters that every company usually asses the pros and cons of the any investment and though, current scenarios of crude price is quite subdued but I think crude price would certainly rebound.

May be it won’t happen in next few months and will take some more time but it will surely come up. Addressing a press gathering after company’s AGM Sarraf added that any discovery will take around 3-4 years as gestation period to get developed and any drop and spurt in the crude price doesn’t affect the core business and investment plan of E&P company. He indicated that crude price may reach $80-90/bbl again.

Asked about the new marginal field policy, where government will auction marginal fields discovered by ONGC, Sarraf said that these fields have been given by the government to ONGC and now they have been taken back by government itself, so there is no question of ONGC getting royalty for these blocks. He said that new policy seems quite lucrative as along with other incentive three is freedom of price for the crude and gas, which will certainly attract private players to take these fields. Company is quite robust on overseas acquisition as via OVL, company recently acquired 15% stake in CSJC Vankorneft, second largest field of Russia at $1.35 billion and company is also bidding for Mexico oil fields in near future. Company is also quite bullish about Iran gas field Farzad B and team of ONGC is meeting Iranian government official within few weeks.