Oil and Natural Gas Corporation (ONGC) has secured approval from the Government of India to pump ₹18,365 crore into ONGC Petro additions Limited (OPaL).
What Happened: ONGC disclosed that it has received the government’s approval for the investment, as per a letter dated August 9 from the Ministry of Petroleum & Natural Gas, Government of India. The sanctioned investment comprises an additional equity capital infusion of up to ₹10,501 crore, conversion of Compulsorily Convertible Debentures (CCDs) worth ₹7,778 crore, and a balance payment of ₹86 crore pertaining to share warrants.
This investment will elevate OPaL to a subsidiary of ONGC, with the latter owning a 95.69% equity stake.
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The GoI has also allowed ONGC to allocate 50% of the annual gas production from new wells or well interventions in nomination fields of ONGC or up to 3.2 MMSCMD (million metric standard cubic meters per day) of domestic natural gas, whichever is lower, to provide feedstock support to OPaL. The price for this allocation will be up to 20% over the APM (Administrative Price Mechanism) price.
This development comes on the heels of a positive market response to ONGC’s increased production guidance. Earlier this month, the company reported a 15% YoY fall in its Q1 standalone net profit to ₹8,938 crore, the company’s revenue saw a 4% increase from the previous year to ₹35,266 crore.
The crude oil realisation also increased to $83.05 (around ₹6,889) per barrel from $76.36 (around ₹6,300) in the previous year. However, total crude oil production fell slightly to 5.23 million metric tons, and total gas production declined by 4% to 4.86 billion cubic meters. The investment in OPaL is expected to bolster ONGC’s production capacity and market position.
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