FILE PHOTO: A technician is pictured inside a desalter plant of Oil and Natural Gas Corp (ONGC) on the outskirts of Ahmedabad, India, September 30, 2016. REUTERS/Amit Dave/File Photo
| Photo Credit: AMIT DAVE

State-owned Oil and Natural Gas Corporation (ONGC) will invest about ₹2 lakh crore in setting up renewable energy sites and green hydrogen plants and cutting gas flaring to zero to achieve its 2038 net-zero carbon emission goal.

The company, which produces about two-thirds of India’s crude oil and about 58% of natural gas, on July 9 released a 200-page document, detailing its path to achieving net zero emissions.

It listed clean energy projects even as it looks to boost its hydrocarbon output to meet the country’s energy needs.

ONGC will invest ₹97,000 crore by 2030 in setting up 5 gigawatts of renewable energy capacity, green hydrogen, biogas, pump storage plant and offshore wind project, according to the document.

Another ₹65,500 crore will be invested by 2035, mostly in a green hydrogen or green ammonia plant, and the remaining ₹38,000 crore by 2038, primarily in setting up 1 GW of offshore wind projects.

These projects will help the firm offset 9 million tonnes of carbon emissions it is directly (Scope-1 emissions) or indirectly (Scope-2 emissions) responsible for.

ONGC said it will invest ₹5,000 crore to cut gas flaring to zero by 2030 through technological intervention. The firm released into the atmosphere 554 million cubic metres of methane in 2021-22 (base year), mostly because it was an incidental by-product of oil or the quantity was not economical enough to pipe it to consumers.

ONGC will spend ₹30,000 crore in setting up 5 GW solar parks that will convert sunlight into electricity and turbines that will do the same with wind energy. It will add 1 GW of solar and onshore wind capacity by 2035 and 2038 at a cost of ₹5,000 crore each.

It will invest ₹40,000 crore by 2030 and a similar amount by 2035 to set up two 1,80,000 tonnes per annum green hydrogen and/or 1 million tonnes of green ammonia projects.

ONGC, which has installations in the Arabian Sea and Bay of Bengal to produce oil and gas from below the seabed, is also looking at installing offshore wind turbines to generate 0.5 GW of electricity by 2030 and double it by 2035. The first 0.5 GW offshore wind project is likely to cost ₹12,500 crore and the next about Rs 12,000 crore.

By 2038, it will add another 1 GW of offshore wind energy capacity at an investment of ₹25,000 crore, the document said.

The company is also looking at investing ₹20,000 crore for setting up 3 GW of pump storage plants to meet electricity requirements when renewable sources like sunlight and wind energy are not available.

The remaining investment will be in biogas, carbon capture and other clean energy projects. All this while it continues to hunt and produce more oil and gas.

Crude oil, which companies like ONGC pump out from below the seabed and from underground reservoirs, is a primary source of energy. It is processed in oil refineries to produce petrol, diesel and jet fuel. With the world looking to transition away from fossil fuels, companies around the globe are looking at new avenues to use crude oil.

Gas produced in a similar fashion is used to generate electricity, produce fertiliser or convert into CNG to power automobiles or into PNG to fire kitchen stoves.

Scope 1 emissions are from directly emitting sources that are owned or controlled by a company. Scope 2 emissions are from the consumption of purchased electricity, steam, or other sources of energy generated upstream from a company’s direct operations.

ONGC produced 21.14 million tonnes of oil in 2023-24 (April 2023 to March 2024) and 20.648 billion cubic metres (bcm) of gas.

Representational image only.

The government has hiked the windfall profit tax on crude oil produced in the country and on export of diesel, while bringing back the levy on overseas shipments of ATF.

The tax, levied in the form of special additional excise duty, on domestically produced crude oil has been raised to ₹7,100 per tonne from ₹4,250 per tonne, according to an official notification.

Besides, the special additional excise duty (SAED) on the export of diesel has been increased to ₹5.50 per litre from ₹1 per litre. A duty of ₹2 per litre will be imposed on the export of jet fuel or ATF with effect from August 15.

There was no SAED on jet fuel prior to this levy. SAED on petrol will continue to be zero. The new tax rates come into effect from Tuesday, the Order dated August 14, said.

India first imposed windfall profit taxes on July 1 last year, joining a growing number of nations that tax supernormal profits of energy companies. At that time, export duties of ₹6 per litre ($12 per barrel) each were levied on petrol and ATF and ₹13 a litre ($26 a barrel) on diesel.

A ₹23,250 per tonne ($40 per barrel) windfall profit tax on crude oil produced by companies such as Oil and Natural Gas Corporation (ONGC) was also levied. The tax rates are reviewed every fortnight based on average oil prices in the previous two weeks.

A windfall tax is levied on domestic crude oil if rates of the global benchmark rise above $75 per barrel. Export of diesel, ATF and petrol attract the levy if product cracks (or margins) rise above $20 per barrel.

Product cracks or margins are the difference between crude oil (raw material) and finished petroleum products. International crude oil prices averaged $86.8 per barrel in August, up from $80.37 in the previous month and $74.93 a barrel in June.

The levy on domestic crude oil dropped to nil in the first half of April as international crude oil prices fell but was back in the second half in step with a rise in rates. Levy on diesel became nil in April but the levy was brought back in August. Levy on ATF became nil in March and has now been brought back. The export tax on petrol was scrapped in the very first review.

Crude oil pumped out of the ground and from below the seabed is refined and converted into fuels such as petrol, diesel and aviation turbine fuel (ATF).

Reliance Industries Limited, which operates the world’s largest single-location oil refinery complex at Jamnagar in Gujarat, and Rosneft-backed Nayara Energy are primary exporters of fuel in the country.