India’s state-owned energy major, Oil and Natural Gas Corporation (ONGC), posted a sharp 35% year-on-year decline in its net profit for the March quarter of FY25, weighed down by lower crude price realisations despite nearly stable oil and gas production. Net profit slipped to Rs. 6,448 crore, while revenue rose marginally by 1% to Rs. 34,982 crore. Annual profit also declined 12% to Rs. 35,610 crore. Still, ONGC ramped up capital expenditure to a record Rs. 62,000 crore and drilled its highest number of wells in 35 years, underlining its strategic focus on production resilience and long-term energy security.
Lower Crude Realisations Weigh on Quarterly Performance
In the final quarter of FY25, ONGC’s net profit slumped to Rs. 6,448 crore, compared to Rs. 9,869 crore in the same period last fiscal, marking a 35% year-on-year contraction. This drop was primarily driven by a decline in crude oil price realisations, which averaged USD 73.72 per barrel in the quarter, down from USD 80.81 per barrel in Q4 FY24.
Despite subdued prices, total revenue edged up slightly by 1% to Rs. 34,982 crore. Crude oil production for the quarter stood at 4.7 million tonnes, a marginal decline from 4.714 million tonnes a year earlier. Natural gas output also dipped to 4.893 billion cubic metres (BCM), compared with 4.951 BCM in the year-ago quarter.
Annual Profit Slides Despite Flat Revenues
For the full financial year 2024–25, ONGC posted a 12% drop in net profit to Rs. 35,610 crore. Annual revenue remained largely unchanged at Rs. 1.37 lakh crore, signaling that the earnings decline was primarily a function of weaker oil and gas pricing rather than lower output.
The company’s average crude oil price realisation for the year was USD 76.90 per barrel, reflecting a 4.8% year-on-year decline. Gas prices, however, remained stable at USD 6.5 per million British thermal units (mmBtu) across both the quarter and the fiscal year.
Production Steady, Domestic Output Sees Modest Growth
ONGC reported that standalone crude oil production for FY25 increased marginally by 0.9% to 18.558 million tonnes, while natural gas production fell slightly to 19.654 BCM from 19.978 BCM the previous year.
The output moderation was largely attributed to natural decline in mature fields, although the company did take proactive steps to arrest production slippage by enhancing drilling operations. During FY25, ONGC drilled 578 wells—the highest number in 35 years—including 109 exploratory and 469 development wells. This compares with 544 wells drilled in FY24.
The increased drilling activity comes in response to policy incentives, including a 10% premium on gas produced from new wells, which the company expects will enhance exploration viability.
Record Capital Expenditure Signals Strategic Shift
In a decisive move to boost long-term production and energy diversification, ONGC reported a capital expenditure of approximately Rs. 62,000 crore in FY25—well above the Rs. 37,494 crore invested in the previous fiscal year.
This investment included Rs. 18,365 crore toward ONGC Petro additions Ltd (OPaL) and Rs. 4,600 crore for green energy ventures under ONGC Green Ltd. The latter includes the acquisition of PTC Energy and Ayana Renewables, highlighting the company's commitment to expanding its renewable energy footprint amid India’s energy transition agenda.
Overseas Operations Stable Despite External Headwinds
ONGC’s overseas arm, ONGC Videsh Ltd (OVL), reported a modest increase in oil production to 7.265 million tonnes in FY25, up 1.2% from 7.178 million tonnes in the prior year. This performance was primarily driven by improved output from joint ventures in Colombia and South Sudan, despite geopolitical instability and operational constraints.
Gas production at OVL declined to 3.013 BCM from 3.340 BCM, with the reduction largely attributed to the end-of-life phase in Vietnam’s Block 06.1. Turnover at OVL decreased to Rs. 12,995 crore in FY25 from Rs. 13,197 crore in the previous year. Net profit also declined to Rs. 418 crore, from a restated Rs. 490 crore in FY24, due to lower realised crude prices, which averaged USD 70.23 per barrel compared to USD 71.47 the prior year.
New Discoveries and Monetisation Milestones
ONGC reported a total of nine hydrocarbon discoveries during FY25, comprising five onshore and four offshore finds. Notably, eight of these were monetised within the same fiscal year—an impressive feat underscoring ONGC’s operational efficiency and exploration strategy.
The timely monetisation of these discoveries adds momentum to ONGC’s upstream ambitions, as the company continues to seek new reserves to offset declining yields from aging fields.
Outlook: Balancing Fiscal Discipline with Growth Ambitions
While ONGC’s near-term profitability has been impacted by external pricing pressures, the company’s operational resilience, aggressive capital deployment, and strategic expansion—both domestically and internationally—suggest a measured yet ambitious approach to securing future growth.
As global energy markets remain volatile and policy landscapes evolve, ONGC’s dual emphasis on traditional hydrocarbons and renewable energy positions it well to navigate the shifting dynamics of the energy economy.
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