ONGC to Launch Crude Trading Unit and Build 1.75 Million Tonne Reserve in Mangalore

State-owned Oil and Natural Gas Corporation (ONGC) has announced plans to enter crude and petroleum-product trading by the end of the year. The initiative is designed to strengthen supply security and extract greater value across the company's energy portfolio while maintaining upstream exploration as its primary focus.

According to Chairman and CEO Arun Kumar Singh, the new trading unit will initially handle the group's own crude and product requirements while also pursuing third-party business. The company is considering locating the desk in Dubai or Singapore. The venture could generate opportunities worth approximately USD 1 billion annually through improved crude sourcing, freight management, and risk management.

Singh noted that about 95 percent of the work on the trading desk is complete. Hindustan Petroleum Corporation Ltd (HPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL), and an incoming international trading partner are expected to hold stakes in the venture. A partner and final location are yet to be decided. The unit will also coordinate with ONGC Videsh Ltd and ONGC Petro Additions Ltd, providing a single commercial interface to replace the current fragmented procurement and sales model.

In addition to the trading unit, ONGC is developing a 1.75 million tonne strategic petroleum reserve in Mangalore at the request of the government. The board-approved project will expand India's dedicated emergency crude storage capacity by about one-third from the current 5.33 million tonnes. Unlike conventional government-funded storage models, this facility will be built on ONGC's balance sheet.

The infrastructure will be situated on an existing land parcel at the Mangalore SEZ. Half of the capacity is designated for strategic use under government plans, while ONGC has sought permission to utilize the remainder commercially. Petroleum ministry data indicates that India's current strategic reserves cover approximately 9.5 days of net oil imports, with stocks held by state-run companies providing an additional 64.5 days of coverage.

Despite the expansion into trading and storage infrastructure, exploration and production remain the foundation of ONGC's corporate strategy. The company intends to spend Rs 1 lakh crore to drill 87 deep-sea wells by 2031. This effort is supported by the government's National Offshore Exploration Scheme, announced in July, which provides Rs 84,000 crore over five years to aid offshore exploration and target reserve additions of over 600 million tonnes of oil equivalent by 2030-31.

As part of 'Project DeepX,' ONGC plans to double its deepwater drilling activity over two years. To address declining production in mature fields, the company is deploying enhanced oil-recovery techniques and seeking partnerships with international producers including BP, Exxon Mobil, Chevron, TotalEnergies, Petrobras, Petronas, Equinor, and Shell.

"ONGC's move to consolidate its trading operations and invest heavily in strategic storage infrastructure reflects a mature approach to supply chain optimization and risk management. By creating a single commercial interface for its subsidiaries and financing storage directly on its balance sheet, the company is positioning itself to capture better margins in global markets while securing domestic energy supplies." — Dr. Shishir Gupta, Founder & CEO, StartupLanes