Oil and Natural Gas Corporation (ONGC) is a state-owned fully integrated oil and gas company headquartered in India. In 2020, it had USD 13.14 billion in revenue and a reported 30,000 employees.* ONGC plans to nearly double its upstream oil and gas production and triple oil refining by 2040. It lacks a credible climate strategy and adequate emissions reduction targets.
ONGC’s locked-in scope 3 emissions from its upstream activities alone are expected to exceed its 1.5°C carbon budget by 25% between 2019 and 2050. This is based on the company utilising all its oil and gas reserves and fields currently under production. However, the company may exceed its carbon budget by far more than this, as its Energy Strategy 2040 is targeting an expansion in annual production from its upstream business from 65 million tonnes of oil equivalent in 2019 to 110 by 2040.
The company continues its exploration activities, with 12 new discoveries made in the financial year 2019-2020 alone. This is incompatible with the International Energy Agency’s (IEA’s) 1.5°C scenario based on which no new oil and gas fields can be approved from 2021.
ONGC’s scope 1 and 2 emissions intensity only saw a small decrease between 2014 and 2019, indicating the company is unlikely to deliver the near 9% annual reduction required by its 1.5°C pathway. Its absolute scope 1 and 2 emissions in 2019 were 30% higher than in 2014. This was in part due to small increases in the company’s upstream oil and gas production, but primarily due to a significant increase in refining emissions following the acquisition of Hindustan Petroleum Corporation Limited.
ONGC’s plan to nearly triple its refining capacity from 35 million tonnes per annum in 2019 to 100 million tonnes by 2040 could lead to a further substantial increase in the company’s scope 1 and 2 emissions.
ONGC has established a Carbon Management and Sustainability Group, but there is no evidence that the company has board-level oversight of climate change issues or that its board members have any significant expertise in the low-carbon transition. The company’s limited consideration of climate change at the executive level is reflected in its strategy, which is focused on nearly doubling upstream production and quadrupling refining capacity by 2040.
Furthermore, the company’s only climate target is an unambitious one to achieve 5 GW of renewable energy capacity by 2040. ONGC has not conducted a climate scenario analysis to understand how transition risks such as oil and gas demand or carbon pricing will impact its business.
NGC’s plan to develop low-carbon business activities lacks ambition. ONGC is targeting 5 GW of renewable energy capacity by 2040, with an intermediate target of 2 GW of onshore wind energy and 1.5 GW of solar energy by 2030. While this would be a significant increase from the 178 megawatt (MW) wind and solar capacity ONGC currently has, a 5 GW capacity developed over a 20 year time frame is unlikely to considerably change the company’s sold energy portfolio at the pace required by the low-carbon transition. The company only expects 10% of profit after tax to come from its non-oil and gas business by 2040. The company does not appear to be developing other low-carbon businesses such as hydrogen production or carbon capture services which could capitalise on its existing upstream and refining competencies.
ONGC receives a trend score of -. If the company were reassessed in the near future, its score would likely decrease. The company made little progress in reducing its emissions intensity between 2014 and 2019. The company’s absolute emissions are expected to continue to rise, due to its plans to increase upstream production and refining. It intends to increase upstream production from 65 million tonnes of oil equivalent per year in 2019 to 110 million tonnes in 2040, and to nearly triple its refining capacity from 35 million tonnes per year in 2019 to 100 million tonnes in 2040.
ONGC is aiming to develop 5 GW of renewable electricity capacity by 2040. It has not set any emissions targets and the main focus of its strategy seems to be on a significant expansion of its upstream, refining and petrochemicals businesses.
The company is considering establishing a separate entity dedicated to renewables. It has also signed a memorandum of understanding with Indian power giant NTPC to develop offshore wind power and other renewables.
The company currently has only a small renewable capacity of 178 MW. It has not disclosed what proportion of current or future CapEx or R&D expenditure will be dedicate to low-carbon technologies. The company intends to use CO2 enhanced oil recovery to increase oil production.
ONGC’s scope 1 and 2 emissions intensity only saw a small decline between 2014 and 2019, while its scope 1, 2 and 3 emissions intensity saw no decrease. The company’s absolute scope 1 and 2 emissions saw a considerable increase in 2018 due to the acquisition of a refining company.
ONGC lacks a comprehensive plan to reduce emissions across its different business units. The company’s renewables target is unlikely to make much difference to its product mix, given the massive expansion of upstream production and refining the company is planning.