ONGC eyes $50 bln group turnover

Top oil and gas producer, Oil and Natural Gas Corp (ONGC), expects group turnover to more than double to $50 billion and above by 2012 and sees overseas acquisitions as a key growth driver, its chairman said on Thursday.

ONGC Videsh, state-run ONGC's overseas investment arm, has a presence in 29 oil and gas projects spread over 15 countries and is spearheading India's quest for securing energy security through overseas equity oil.

"We intend to strengthen ONGC Videsh and intensify further acquisition endeavours for future growth. The overseas oil and gas assets will substantially contribute in revenue stream," Chairman and Managing Director R.S. Sharma told Reuters in an interview.

"I am optimistic that ONGC Group shall not only reach but overshoot the $50 billion turnover target by 2012," he said.

ONGC's group companies include refiner Mangalore Refinery and Petrochemicals Ltd and two joint venture firms with Mittal Investments, part of a group that includes Arcelor Mittal, the world's top steel maker.

Shares in ONGC, which is India's second-biggest listed firm with a market value of nearly $62 billion, closed 3.26 percent down at 1,093.35 rupees, in a Mumbai market down 3.8 percent. They rose as much as 6 percent during trade.

Sharma said ONGC Videsh was facing challenges while shopping overseas, due to high oil prices.

"With oil prices rising, oil and gas properties across the world are under pressure," he said.

"Demand for oil has shown insensitivity to prices, which is a disturbing phenomenon. In this situation, we have to live in the era of high oil prices," said Sharma, who took charge of ONGC in July, after 19 years in the company.

Oil prices touched a record high of $89 a barrel on Wednesday and Sharma expected them to rise further in the near future.

NEW GAS FINDS

Sharma said ONGC was setting up a 50-megawatt wind power project in the western state of Gujarat.

ONGC is often criticised for not doing enough to increase oil output and Sharma said it planned to spend $31 billion as capital expenditure for local and overseas exploration and production, most of which would be funded internally.

The company lags behind private firms such as rival Reliance Industries Ltd and the Indian unit of British explorer Cairn Energy Plc in exploratory success. Both Reliance and Cairn have made significant discoveries in oil and gas in India.

ONGC's gas finds in the Krishna Godavari basin off the east coast and fields nearby have been expected to yield 12-15 million cubic metres per day of gas by 2012/13.

"We have submitted the field development plan for east coast discoveries to the DGH (director general of hydrocarbons) yesterday and volumes are more than what we had said earlier," Sharma said.

ONGC's ageing domestic fields are facing a natural decline of up to 8 percent annually. It produced 26.05 million tonnes of oil and 22.44 billion cubic metres of natural gas for 2006/07.

"With downward production due to natural decline from the existing fields, gas production (from old fields) is expected to decrease in the coming years," he said.