ONGC Gears Up for the Future: Diversifies Into LNG, Refining & Renewables Amid Oil Glut

India’s largest oil company, ONGC, is diversifying to counter falling oil prices caused by an expected global surplus. The company plans to expand into refining, petrochemicals, LNG trading, and renewable energy. Rising production costs and declining output from older fields make this shift necessary. ONGC aims to secure 3 million tons of regasification capacity on India’s western coast and is negotiating long-term gas supply deals. It is also considering building its first refinery focused on oil-to-chemical conversion.

Currently, ONGC controls 20% of India’s refining capacity through its subsidiaries. As electric vehicle adoption grows, demand for traditional fuels is expected to decline. To stay competitive, ONGC plans to boost its renewable energy capacity to 10 gigawatts by 2030. It will soon invite bids for 1 gigawatt of solar and wind projects for its own use. These strategic shifts aim to ensure long-term profitability despite the changing energy landscape.

ONGC Gears Up for the Future: Diversifies Into LNG, Refining & Renewables Amid Oil Glut

India’s leading oil and gas company, Oil and Natural Gas Corporation (ONGC), is preparing for a shift in the global energy market, where oil prices are expected to drop due to an oversupply. To ensure financial stability and growth, ONGC is diversifying its operations into various sectors, including refining, petrochemicals, liquefied natural gas (LNG) trading, and renewable energy. The company’s Director of Strategy, Arunangshu Sarkar, is spearheading this initiative, emphasizing that these ventures will help ONGC remain competitive despite market fluctuations.

As the world transitions toward cleaner energy, electricity consumption is rising, reducing dependence on traditional fossil fuels. ONGC is among several oil companies adapting to these changes by exploring new business opportunities. Sarkar noted that declining crude oil prices, rising production costs, and diminishing yields from aging oil fields make it essential for the company to seek alternative revenue streams to ensure long-term profitability.

One of ONGC’s key initiatives is expanding its presence in the LNG sector. The company plans to secure a regasification capacity of 3 million tons per year on India’s western coast. Regasification is the process of converting LNG back into gas for distribution and use. ONGC is already in discussions with city gas distribution companies for long-term agreements, ensuring a steady demand for imported LNG. Since LNG prices are linked to crude oil benchmarks, purchasing lower-cost LNG from global markets and selling it in India could help offset losses from declining crude prices.

Beyond LNG trading, ONGC is considering establishing its first refinery, with a focus on converting crude oil into petrochemicals. While specific details of the project are yet to be disclosed, the initiative is seen as a strategic move to enhance the value of its crude oil production. ONGC already has a strong foothold in the refining sector through its subsidiaries, Hindustan Petroleum Corporation Ltd. (HPCL) and Mangalore Refinery and Petrochemicals Ltd. (MRPL), which collectively account for about 20% of India’s total refining capacity.

As electric vehicle adoption increases, the demand for conventional fuels such as diesel and gasoline is expected to decline. By shifting towards petrochemicals—widely used in industries such as plastics, pharmaceuticals, and textiles—ONGC aims to establish a more stable and profitable business model.

Another vital aspect of ONGC’s diversification strategy is its investment in renewable energy. The company has set an ambitious target of achieving 10 gigawatts (GW) of renewable energy capacity by 2030—more than three times its current capacity. To reach this goal, ONGC plans to invest in solar and wind energy projects, with a near-term objective of developing 1 GW of renewable power for its own operational use. The company is preparing to invite bids from developers for these projects, marking a significant milestone in its transition to sustainable energy.

The global energy landscape is rapidly evolving, with a growing emphasis on cleaner and more sustainable sources. For ONGC, this means reshaping its business model to remain relevant and competitive. The company’s diversification into LNG, refining, petrochemicals, and renewable energy demonstrates a forward-thinking approach to mitigating risks associated with volatile crude oil prices and the long-term decline in fossil fuel demand. By expanding into these sectors, ONGC is not only securing its future but also contributing to India’s broader energy transition goals.

As ONGC implements these changes, it is poised to play a pivotal role in shaping India’s energy future. With substantial investments in LNG infrastructure, refining, and clean energy, the company is positioning itself as a key player in India’s shift from a fossil fuel-dependent economy to a diversified and sustainable energy ecosystem. This strategic transformation ensures that ONGC remains resilient, profitable, and prepared for the challenges of an evolving global energy market.