ONGC’s ‘Guyana Moment’ Faces North Block Capital Drain Risk
ongc naugurated its ASP Chemical Enhanced Oil Recovery Project at Jhalora Field, Ahmedabad Asset! (Image ONGC)
Digging Deep, Draining Fast: ONGC’s Exploration Revival Amidst a Fiscal Squeeze
By P. SESH KUMAR
NEW DELHI, June 16, 2025 – Oil and Natural Gas Corporation (ONGC) has launched its most aggressive exploration campaign in decades, drilling nearly 500 wells in a bid to find new reserves and reduce the country’s reliance on imports. Celebrated by Union Petroleum Minister Hardeep Singh Puri as India’s potential “Guyana moment,” this surge in activity is being framed as a game-changing development.
However, a closer look—through the lens of CAG audits and fiscal policy constraints—reveals a more sobering reality. Systemic underperformance, governance lapses, and the government’s relentless pursuit of dividends have created a paradox: ONGC is being urged to dig deeper for oil while its financial flexibility is being steadily hollowed out.
When India’s Petroleum Minister declared ONGC’s recent surge in exploration—the drilling of nearly 500 wells in a single cycle—as the company’s most significant push in 37 years, there was unmistakable enthusiasm. It was a bold move in a sector often characterised by slow churn and modest returns. By invoking the “Guyana moment”—a reference to the offshore oil discoveries that transformed the tiny South American country into a petrostate—the Minister was not merely celebrating ONGC’s operational revival; he was framing it as a national turning point.
Indeed, for a country that imports more than 85% of its crude oil, any promise of indigenous discovery is politically seductive and strategically vital. ONGC’s new drilling campaign, which spans both onshore and offshore sites, signals a desire to rewrite India’s energy narrative. It also reflects a renewed institutional appetite for risk—driven perhaps by the combined pressures of energy security, geopolitical uncertainty, and the global volatility of oil prices. But dig beneath the surface, and the picture is more complex, and less flattering.
The enthusiasm is tempered by ONGC’s chequered history with discovery success. The company’s only notable new onshore strike in decades, in Ashoknagar, West Bengal, took more than half a century of effort and over 150 wells to materialize into a modest reserve. Most of ONGC’s production continues to come from ageing fields like Mumbai High, whose productivity is waning despite technical interventions. The company’s offshore ventures, too, have struggled to consistently deliver commercially viable finds.
It is here that the insights from the Comptroller and Auditor General (CAG) of India offer a sobering counterpoint to the official narrative. The CAG, in its most recent performance audits, flagged serious inefficiencies in ONGC’s functioning. One audit observed that production estimates had been inflated in several internal documents, potentially masking underlying operational weaknesses.
More importantly, the CAG raised questions about the efficacy of internal controls, project implementation delays, and the absence of robust outcome tracking mechanisms in ONGC’s upstream projects. In other words, more wells do not necessarily mean more oil—unless backed by disciplined planning, technology, and fiscal room to manoeuvre.
But ONGC’s ability to invest and innovate is being steadily compromised by a different kind of pressure—one that comes not from the geological subsoil, but from the fiscal corridors of North Block. In recent years, the Government of India, ONGC’s majority shareholder, has increasingly leaned on the company to declare record-high dividends to bolster public finances. In FY 2024–25 alone, ONGC paid over ₹15,400 crore as dividends, a substantial outflow that directly cannibalized funds available for capital expenditure.
This forced generosity has created a paradox. ONGC is expected to undertake risk-laden, capital-intensive exploration on one hand, while simultaneously depleting its investible surplus to meet the Centre’s fiscal needs on the other.
The result is a weakening of its ability to fund critical upstream activities such as deep-water drilling, enhanced oil recovery technologies, and basin modelling—all of which are essential if India is to achieve anything close to a “Guyana moment.”
The CAG, in a separate report, underlined how this skewed financial approach has led to delays in project completions, missed production targets, and inefficient deployment of capital resources. ONGC’s declared capital expenditure target of around ₹30,800 crore may look ambitious on paper, but in practice, its ability to achieve this consistently is being throttled by policy-driven dividend expectations.
This unsustainable trade-off between short-term fiscal gain and long-term energy security is a dangerous drift, especially in a sector that depends on patient capital and consistent reinvestment.
What makes this spectacle even more ironic is that the government’s push for ONGC to act like a profit-maximizing corporate entity—through high dividends—contradicts its mandate to act like a national oil company focused on long-term strategic reserves and national energy goals. In effect, ONGC is being asked to perform like ExxonMobil but invest like a frugal PSU. This institutional schizophrenia undermines not only its operational strategy but also erodes its long-term competitiveness.
Yet, none of this is to dismiss the importance or intent of ONGC’s current efforts. The 500-well campaign is not an insignificant milestone. It demonstrates a rare burst of institutional momentum.
It sends a positive signal to global energy markets that India is serious about upstream development. And it may well yield one or two breakthroughs that justify the optimism. But for this moment to become a movement, it must be undergirded by a structural rethink.
ONGC must be given financial autonomy to reinvest its profits rather than bleed them out in dividend mandates. It needs to be shielded from arbitrary policy diktats and provided with regulatory certainty to undertake long-term investments. Most importantly, it must be held to performance metrics that go beyond well-counts and instead focus on reserve additions, cost recovery, and production efficiency.
India’s ONGC stands at a curious crossroads—celebrated for its aggressive drilling drive even as it is starved of the capital it needs to truly break new ground. The “Guyana moment” metaphor has emotional and symbolic value, but unless matched with institutional and financial reforms, it risks becoming a hollow invocation. The CAG’s audit signals are clear: exploration success cannot be built on fiscal extraction. If ONGC is to genuinely transform India’s energy landscape, it must be allowed to invest in its future—not just fund the government’s present. The wells may be deep, but the vision must be deeper.
(This is an opinion piece; views expressed solely belong to the author, who has served as DG of the CAG)
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