India’s Oil and Natural Gas Corporation (ONGC) plans to launch a “huge” global acquisition spree, as the energy flagship go in for an aggressive $180 billion investment push to take on Chinese rivals and drive foreign production up sevenfold by 2030.
Dinesh Sarraf, ONGC chairman, said that the group aimed to raise its international oil and gas output from 8.5 million tonnes of oil and oil equivalent last year to 60 million tonnes over that period, as India prepares to meet projections of rapidly rising domestic energy demand.
The foreign expansion is likely to see India’s largest industrial company by market capitalisation ramp up operations in almost all of the world’s energy-producing regions. “The kind of investments which we will require is huge,” Sarraf said. “Our goals are so high we can’t pick and choose parts of the world; it will come from virtually everywhere.”
ONGC has historically been viewed as a conservative, midsized global energy player, held back by cautious management and risk-averse political leadership in New Delhi. It also has often lost out to more aggressive state-backed Chinese energy groups in the race to snap up foreign oil and gasfields, analysts say.
Recent years have seen a markedly bolder approach, however, following the launch last year of a strategy known as “Perspective 2030”, designed to bolster overseas operations. ONGC has invested about $7 billion since mid-2013 to acquire foreign assets in countries such as Mozambique and Brazil.
Sarraf pledged that this global expansion would now accelerate, potentially aided by a rapid recent fall in global oil prices. “We see this as a time we can make certain deals,” he said. “Prices are lower, and so some new deals may be available.” India is set to overtake China to become the largest source of growth in global oil demand by 2020, according to the International Energy Agency. Almost of all of this increase will be met via imports, given India’s limited domestic production.
ONGC’s plans have been helped by recent economic reforms launched by India’s prime minister Narendra Modi, who last week moved to deregulate diesel controls and increase natural gas prices, boosting the energy explorer’s share price.
Later this year Modi also plans to sell off a further 5 per cent stake in ONGC, which is 69 per cent-owned by India’s government, raising in the region of $ 3 billion that could be used for further acquisitions around the globe