ONGC’s Cost Cutting Drive Targets ₹9,300 Crore Savings
Oil and Natural Gas Corporation (ONGC) has initiated a comprehensive cost optimisation programme to safeguard its profitability. The state-run giant aims to achieve a 15 percent cost reduction, totaling ₹9,300 crore in savings by the financial year 2026-27. This proactive ONGC’s Cost Cutting Drive is a direct response to anticipated market conditions. With oil prices trending downwards over the last five years and the global energy transition gaining pace, ONGC is strategically preparing for a future where crude prices hover around $60 per barrel. A dedicated Cost Council has been established to oversee these structural savings, which will focus on rationalising logistics, optimising offshore resources, and increasing drilling efficiency. The company confirmed that this cost reduction will not involve layoffs.
Strategic Partnerships to Boost Production and Revenue
Coupling cost reduction with a major push for output, ONGC is simultaneously tackling production decline from its maturing fields. The company has engaged British Petroleum (BP) as a Technical Service Provider (TSP) for its crucial Mumbai High (MH) field. This partnership targets an ambitious 44 percent increase in oil output and an 89 percent jump in gas production over the next decade. This effort alone is projected to unlock up to $15 billion in additional revenue.
Similar technical partnerships are being explored for other key offshore fields. Furthermore, ONGC has enlisted bp as a Subject Matter Expert (SME) to diagnose and fix well-performance issues at the high-profile KG-DWN-98/2 deepwater block, where peak production has not yet been achieved. The company is treating these cost and production strategies as a “strategic journey” designed to enable structural agility and reinvestment in high-return projects.
Streamlining Operations and Infrastructure
To secure the financial target, ONGC is implementing significant operational overhauls. A major structural reform involves scaling up the Pipavav Supply Base (PSB) to handle nearly two-thirds of the western offshore workload. This move is projected to unlock ₹1,000 crore in annual savings by reducing vessel turnaround time and optimizing logistics routes.
ONGC is also moving to consolidate infrastructure through the approved joint development plan for the Combined Western Offshore Development Project (CWODP). This plan merges eight smaller projects, carrying a combined capital expenditure of ₹13,000 crore, into one efficient framework. This consolidated effort is expected to yield over 12 MMT of incremental oil and 13 BCM of gas in the coming years, underscoring the company’s commitment to balancing structural cost reduction with sustained volume growth.
Vishal Duggal, Chief Editor, News Orbiter, possesses over two decades of journalistic experience across print and web domains. He headed the editorial team of “Sahara Time” a 48-page general interest English weekly newspaper. He was also a senior editor with Exchange4media group’s real estate magazine “Realty Plus” and prior to that Consulting Editor with “Geopolitics” a magazine on defence and strategic affairs, and Executive Editor with Pravasi Indians, a magazine on the global Indian diaspora. Currently, he lends his professional expertise to several publications and websites.
