Feb. 15: Public sector oil major Oil and Natural Gas Corporation (ONGC) is set to witness a significant change in its revenue stream over the next couple of years. The company is close to completing two of its major projects not linked directly to oil or gas production. This includes two petrochemical projects and a power plant.
“We are building two projects for value added products such as the petrochemical, one at Dahej (in Gujarat) and one near Mangalore,” says Mr D. K. Sarraf, director (finance), ONGC.
“The total investment for the Dahej project is Rs 19,500 crore — over 60 per cent of the orders for the project have been placed already. Work is also going on at the Mangalore project” he said.
The project at Mangalore is in partnership with subsidiary Mangalore Refinery and Petrochemical Ltd (MRPL) and is expected to be complete by the end of 2012. This will produce paraxylene, a high value product. The firm is also participating as an investor in the special economic zone coming next to the two projects. The other new revenue stream coming up for the firm is power. ONGC has put up a 726.6 MW natural gas fuelled power plant in Tripura — the first phase of which should be commissioned by the end of the year, Mr Sarraf says.
Tripura has significant supplies of natural gas but local demand isn’t enough. Converting gas to power allows it to be moved easily across the power grid and delivered to the markets. Interestingly, ONGC’s petroleum production from oil and gas fields in India has been stable for the past several years.
Growth for the firm has come by moving into exploration/production outside India via ONGC Videsh, and through its acquisition of MRPL — an oil refinery. These projects will mark another level of diversification for the firm that’s trying to convert its cash flows to growth.