ONGC Chairman Says Crude Prices Drive India's Oil Imports from US and Venezuela

India’s crude oil imports from countries such as the United States and Venezuela are primarily determined by prevailing market prices, according to Arun Kumar Singh, Chairman and CEO of Oil and Natural Gas Corporation (ONGC). Speaking to the media following the company's Annual General Meeting on Monday, Singh noted that over 60 percent of India's oil imports function on prices in a particular month or M+2.

Addressing queries regarding imports by Mangalore Refinery and Petrochemicals Ltd (MRPL)—a subsidiary of state-owned ONGC—Singh explained that purchases are largely driven by spot cargo pricing rather than long-term term contracts. Term crude supplies are reportedly seeing a gradual decline, while spot crudes are evaluated cargo-to-cargo based on prevailing rates.

Amid ongoing shifts in global crude oil trade flows, Singh addressed the broader impact of price volatility on ONGC's financial health. He stated that the company remains 'fairly balanced' against market fluctuations due to its integrated business model. ONGC's current operational structure is split roughly 60-40 between exploration and production (E&P) and non-E&P businesses.

Singh added that the integrated framework allows one segment of the business to offset operational pressures in another. When crude prices rise, downstream operations can potentially generate higher returns to balance out fluctuations elsewhere. He confirmed that ONGC is operationally prepared to handle a crude oil price range of $60 to $90 per barrel.

Commenting on potential geopolitical disruptions and backup plans if Russian oil imports were to stop, Singh shared his personal perspective that crude oil would remain accessible to India. He noted that global supply capacity currently exceeds demand by roughly 7 million barrels per day. While geopolitical issues may create temporary supply friction, Singh emphasized that economic considerations and market supply fundamentals ultimately prevail over time.

Regarding the economic impact of higher import costs on India's roughly $4 trillion economy, Singh acknowledged that a significant rise in energy prices would create financial pressure, though it would not cause severe economic disruption.

"Arun Kumar Singh's remarks highlight the critical role of cost optimization and operational agility in the energy sector. For businesses operating in commodities and heavy industries, maintaining an integrated model with a balanced upstream and downstream portfolio is an effective strategy to mitigate market volatility. As global supply chains face ongoing geopolitical shifts, energy companies must prioritize pricing flexibility and diversified sourcing to maintain financial stability." — Dr. Shishir Gupta, Founder & CEO, StartupLanes