“The budget presents a mixed bag for the sector, while certain provisions are encouraging, there is still scope for further policy refinements to accelerate the industry’s growth,” says ES Ranganathan.
ES Ranganathan, a veteran of the Indian energy sector, and the Former Managing Director of Indraprastha Gas Limited (IGL), offers a comprehensive analysis of the Union Budget 2024, highlighting its implications for the oil and gas industry. His analysis explores the strategic allocations, emerging opportunities, and the broader implications for sector growth and development.
Public Sector Undertakings: A Mixed Bag
The differential allocations in the union budget 2024 to public sector undertakings for the oil and gas sector indicate a strategic shift in priorities. “The increased allocation to ONGC is a positive step, reflecting the government’s confidence in the company’s exploration and production capabilities,” remarks ES Ranganathan.
The Ministry of Petroleum and Natural Gas has been allocated a total budget of ₹1,19,402.52 crore for the fiscal year 2024-2025. This substantial allocation shows the government’s dedication to securing energy resources and enhancing sector growth. “This significant financial commitment towards energy infrastructure is a strategic move to fortify our nation’s energy security and economic stability,” asserts ES Ranganathan.
He believes that this budget, which includes both budget support and Internal and Extra Budgetary Resources (IEBR), aims to strengthen India’s energy capabilities. The Oil and Natural Gas Corporation (ONGC) has received an allocation of ₹30,800 crore for 2024-2025, reflecting a steady increase from the previous year’s budget. “The continuous rise in ONGC’s budget allocation is a testament to its pivotal role in driving India’s energy sector forward,” highlights ES Ranganathan.
However, Mr. Ranganathan underscores the reduced allocation to the Gas Authority of India Limited (GAIL) might signal a recalibration of the gas value chain or a focus on alternative revenue streams. It has seen a significant reduction in its budget allocation to ₹4,886 crore for 2024-2025. “The realignment of GAIL’s budget reflects a nuanced approach to optimizing resource allocation within the sector,” adds ES Ranganathan. This could indicate a strategic pivot in GAIL’s project pipeline or a focus on other emerging priorities within the sector.
Navigating the Energy Transition
ES Ranganathan mentions the importance of embracing new technologies in the oil and gas sector. “Digitalization, artificial intelligence, and advanced analytics are transforming the industry, and Investments in research and development are crucial to enhance exploration efficiency and optimize production,” adds Mr. Ranganathan.
The recent auctions for oil and gas blocks are a positive development, but ES Ranganathan cautions that successful exploration and production depend on a supportive policy environment and adequate infrastructure. “India’s National Hydrogen Mission is a significant step towards a low-carbon future, where the oil and gas industry can play a vital role in hydrogen production and distribution,” says ES Ranganathan.
Exploration and Production: A Promising Outlook
The budget’s emphasis on exploration and production is a welcome development. “The increased allocation to OVL is a strategic move to secure energy resources abroad; however, domestic exploration also requires sustained investments and policy support to maximize the potential of India’s hydrocarbon resources,” emphasizes ES Ranganathan.
Oil India Limited has received an increased allocation of ₹6,880 crore for 2024-2025. Mr. Ranganathan states, “The augmented budget for Oil India Limited is a strategic move to bolster our domestic production capabilities.”
Technological advancements are revolutionizing exploration activities, making them more efficient and less risky. The budget supports the adoption of cutting-edge technologies to improve exploration success rates. “Integrating advanced technologies in exploration is essential for unlocking new reserves and optimizing resource extraction, thereby enhancing productivity and reducing operational costs,” further adds ES Ranganathan.
The Road Ahead
The Union Budget 2024 demonstrates a balanced approach to enhancing India’s oil and gas sector, with strategic allocations aimed at bolstering exploration, production, and refining capabilities. ES Ranganathan’s insights bring out the importance of these investments in driving sector growth and ensuring energy security.
While summing up, ES Ranganathan concludes “The budget has laid a strong foundation for the oil and gas sector, but the industry must continue to adapt to the evolving energy landscape; investments in research and development, digitalization, and low-carbon technologies will be crucial for long-term sustainability.”
Follow our WhatsApp channel
