Oil India Limited (NSE: OIL) Q2 2025 Earnings Call dated Nov. 06, 2024
Corporate Participants:
Sachidananda Maharana — General Manager, F&A
Ashok Das — Director, Human Resources, and Additional Charge of Director, Finance
Rupam Barua — Executive Director, Finance and Accounts, and Chief Financial Officer
Trailukya Borgohain — Chief General Manager, OSD
Saloma Yomdo — Director, Exploration and Development, and Additional Charge of Director, Operations
Unidentified Speaker
Debojit
Analysts:
Varatharajan Sivasankaran — Analyst
Probal Sen — Analyst
Kirtan Mehta — Analyst
Vidyadhar Ginde — Analyst
S. Ramesh — Analyst
Mayank Maheshwari — Analyst
Sabri Hazarika — Analyst
Hardik Solanki — Analyst
Somaiah Valliyappan — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Oil India Limited 2Q FY ’25 Results Conference Call, hosted by Antique Stock Broking Limited. [Operator Instructions]
I now hand the conference over to Mr. Varatharajan Sivasankaran from Antique Stock Broking Limited. Thank you, and over to you, sir.
Varatharajan Sivasankaran — Analyst
Thank you. Neha. A very good morning to everyone. I would like to welcome all the participants to this call and the management of Oil India Limited, represented by Shri Ashok Das, Director, HR, also holding charge — additional charge of Director, Finance; Shri Saloma Yomdo, Director, E&D, holding additional charge of Director, Operations; Shri Rupam Barua, ED F&A and CFO; and Shri Sachidananda Maharana, CGM F&A.
I’d like to hand over the call to the management for their initial remarks, and then we can move on to Q&A.
Sachidananda Maharana — General Manager, F&A
Thank you, Mr. Varatharajan. We now request our Director, HR and [Indecipherable] additional charge of Director, Finance, Mr. Ashok Das, to kindly give the inaugural address.
Ashok Das — Director, Human Resources, and Additional Charge of Director, Finance
Thank you. A very warm good morning to the friends. At the outset, we would like to thank Messrs. Antique Stock Broking Limited for organizing this call for discussing the second quarter FY ’25 results with the management of the Company.
The Company’s financial results for the quarter ended 30th September ’24 were approved by the Board of Directors on 5th November 2024 and have been published. The Company has achieved significant milestones in terms of growth in production numbers of both crude oil and natural gas. The significant financial and operating achievement will be briefed by our ED F&A and CFO, which can be followed by a Q&A session. So I welcome you once again to the con call. Thank you
Rupam Barua — Executive Director, Finance and Accounts, and Chief Financial Officer
Good morning dear friends. At the outset, I would like to thank Messrs. Antique Stock Broking Limited for organizing today’s analyst call. I am Rupam Barua, CFO of the Company. The Company’s financial results of Q2 financial year ’24-’25 were published on 5th November 2024. I’ll briefly give some highlights about the performance of the Company in both physical [Phonetic] and financial terms.
Now, coming to the stand-alone results, beginning with the production front. The Company has continued to improve its crude oil production, which is higher by 4.79% in quarter ended 30th September 2024 at 0.875 MMT vis-a-vis 0.835 MMT in the quarter ended 30th September 2023. Crude oil production has increased by 5.5% in half year ended 30th September 2024 at 1.746 MMT vis-a-vis 1.655 MMT in the half year ended 30th September 2023.
Natural gas production during half year ended 30th September 2024 is at 1.617 BCM, increased by 3.99% over the production in half year ended 30th September 2023, which was 1.555 BCM. However, natural gas production for the quarter ended 30th September 2024 is marginally lower by 1.36% at 0.799 BCM vis-a-vis 0.810 BCM for the quarter ended 30th September 2023.
On the financial side, average crude oil price realization for Q2 is $79.33 per barrel vis-a-vis $86.6 per barrel for quarter two financial year ’24, decreased — for financial year — quarter two finance — ’24 decreased by 8.67%. For the half year ended 30th September 2024, average crude oil realization is $82.09 per barrel vis-a-vis $82.22 [Phonetic] per barrel for the half year ended 30th September 2023, which decreased by 0.16%. Average natural gas price remains — for the quarter has remained at $6.5 MMBtu.
The turnover for half year ended 30th September 2024 has increased by 7.58% to INR11,358.62 crores compared to INR10,558.04 crores in half year ended 30th September 2023. This is mainly due to higher crude oil and natural gas selling in half year financial ’25 compared to half year financial ’24. Average natural gas price for Q2 FY ’25 was — remained unchanged at $6.5.
The EBITDA margin for Q2 financial year ’25 has decreased by 47.67% vis-a-vis 48.29% for Q2 FY ’24, which is mainly due to lower crude oil price. Profit after tax for Q2 financial year 24-’25 is INR1,834.07 crores vis-a-vis INR325.31 crore for Q2 financial year ’23-’24. The profit after tax for the half year ended 30th September 2024 has increased by 70.26% to INR3,300.91 crores vis-a-vis INR1,938.74 crore for the half year ended 30th September 2023.
The earnings per share for the half year ended 30th September 2024 is INR20.29 per share vis-a-vis INR11.92 for the half year ended 30 September 2023.
Now, I’m going to give financial performance of Numaligarh Refinery Limited. Profit after tax of Numaligarh Refinery Limited for Q2 financial year ’24-’25 is INR175.05 crore vis-a-vis INR735.51 crore during Q2 financial ’23-’24. And profit of after tax for the half year ended 30th September 2024 is INR605.58 crore compared to INR657.95 crore for the corresponding period last year.
NRL’s gross refining margin during the Q2 financial ’24-’25 is $2.25 per barrel vis-a-vis $16.04 per barrel during Q2 financial year ’23-’24. And gross refining margin for the half year ended 30th September ’24 is $4.45 a barrel vis-a-vis $13.49 a barrel for the half year ended 30th September 2023.
NRL’s EBITDA for Q2 financial year ’24-’25 is INR398.85 crore vis-a-vis INR1,084.55 crore for the Q2 financial year ’23-’24, while EBITDA for the half year ended 30th September ’24 is INR1,132.5 crore vis-a-vis INR1,079.34 crore for the half year ended 30th September ’23-’24.
Our consolidated results, OIL’s group turnover for the half year ended 30th September 2024 is INR17,456.79 crore vis-a-vis INR15,225.23 crores for the half year ended 30th September 2023. And consolidated profit after tax for the half year ended 30th September 2024 is INR4,085.46 crore vis-a-vis INR2,039.85 crore for the half year ended 30th September 2023.
With this, my opening remarks on performance is over. We are now open to question and answer.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Probal Sen from ICICI Securities. Please go ahead.
Probal Sen
Thank you for the opportunity, sir. Just had a couple of questions. First was, what is the reason for the sequential dip a little bit that we have seen in the natural gas production in Q2?
Sachidananda Maharana
Actually, your voice is not clear. Can you please repeat the question?
Probal Sen
Sir, is this better? Am I audible now?
Sachidananda Maharana
Yes, now you are audible. Please…
Probal Sen
I was saying, sir, that first question was what is the reason for the sequential decline, QoQ decline in gas production? Any color you can throw on this?
Trailukya Borgohain
Actually, there are — this is Trailukya Borgohain [Phonetic], by the way, CGM OSD [Indecipherable] of questions. So, what is happening in this period is a little bit of shutdown, especially NTPS, Namrup Thermal Power Station, and LTPS, Lakwa Thermal Power Station. They take around 0.6 and 0.4, 0.5 [Phonetic] or something like that, around 1 MSM [Phonetic]. So they — during that period, during this Q2 period, they had a major shutdown. They didn’t operate. And also NRL, what happened is that they had some surplus naphtha during this period. So NRL consumption was also a little bit low. And APL also was — from 27/08 to 30/09, almost, you can say, 20 days — maybe close to 20 days, they were having some emergency plant [Indecipherable] low upliftment. Basically, this is because of the low upliftment. It is not that we cannot produce. We could produce, but because this low upliftment by the customers, because of that only, it happened.
Probal Sen
So, sir, if I can ask a follow up, in the third quarter then, have we seen a reversal of some of these conditions? So, can we expect a pickup in offtake in the third quarter if the shutdowns are over and NRL’s surplus naphtha is also used up?
Trailukya Borgohain
I think in this quarter, quarter three — in the quarter three, I think there will be more uplift. But on the other hand, there will be a little bit of less upliftment by the PBGPL [Phonetic] because this is the lean season for the PBGPL [Phonetic]. So, overall, I think there will be small increments. I think it will go to the level of the earlier quarter or maybe a little bit more. Yes.
Probal Sen
So, for FY ’25, then, overall, the guidance that we had of 3.2 to 3.3 BCM, if I remember correctly, that is still maintained? That is the kind of production we expect to still do?
Trailukya Borgohain
That we will maintained.
Probal Sen
And, sir, any guidance you can give for FY ’26 as of now?
Trailukya Borgohain
For FY ’26, no, because we are in upgradation of many facilities, basically. And we are thinking about the pipeline from IGGL. All those things, unless they come, I think the situation will remain a little bit more or less like that. But, overall, I think we will be able to go good once that IGGL line comes.
Probal Sen
So ’26, we don’t have any guidance as of now on the gas production is what you’re saying?
Trailukya Borgohain
As of now, no, sir. The only thing that we can tell you about is that there will be less of flaring [Phonetic] because we have already installed the Kumchai-Kusijan pipeline. So, this [Indecipherable].
Sachidananda Maharana
And the Director of E&D also is coming. He will [Speech Overlap].
Saloma Yomdo
This is Saloma, Director, Exploration.
Probal Sen
Hello, sir.
Saloma Yomdo
So, you are aware that the long-term vision of the Company in the next few years is to achieve production close to 4 million tonnes of oil and 5 BCM of gas per year. So, that’s the long-term vision, which we envision to accomplish within the next couple of years. So, the capital increase will definitely be there. Now, the bottlenecks with respect to low upliftment of customers, etc., will be mainly offset by, like our CGM said, by the proposed IGGL pipeline, which will come up. And in the meantime, we are aggressively going for achieving zero flare by December ’25. And so, there is also going to be an increase in offtake where we see that there is potential requirement — additional requirement even from existing customers. So, year-on-year, you can expect that this 4% or 5% incremental growth in gas production and oil production will definitely continue.
Probal Sen
Understood, sir. That’s what I was looking for. One last question, if I may, on NRL. This quarter’s under — is it possible to share the GRM including the excise duty benefit? I think the number shared was net of that.
Sachidananda Maharana
Actually, the GRM which is reported by NRL is always without excise benefit because that is the comparable GRM on pan-India basis. So, excise duty is never included as part of GRM reported by the refinery. Now, the GRM which has been reported by NRL for this quarter two is only $2.25 per barrel, okay? But having said that, there is — also there is an issue in this quarter in terms of the inventory loss, which is prevalent across the industry, actually, during this quarter. So, the inventory loss is about $4.50 per barrel. So, if you remove that, then the GRM would have been about $6.7 — $6.5, $6.7.
Probal Sen
Similar to what it was last quarter?
Sachidananda Maharana
Yes.
Probal Sen
Okay sir, I have more questions. I’ll come back in the queue. Thank you so much.
Sachidananda Maharana
Yes. No problem.
Operator
Thank you. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead. Mr. Kirtan, your line has been unmuted. Please go ahead with your question.
Kirtan Mehta
Thank you, sir, for the opportunity. I also want to understand in terms of the — while we had given a YoY production rate on the oil side, the sales was — there was a YoY decline in the sales of oil. Could you explain the reasons for the same?
Ashok Das
Can you repeat your question clearly?
Kirtan Mehta
For the crude oil production, there has been a 4% YoY growth in this quarter. As against that, there has been a 1.8 — 1% to 2% decline in the sales for the crude oil. What is the reason which has led to this YoY decline in the crude oil sales?
Rupam Barua
Actually, in the last quarter, there was an NRL shutdown was there.
Ashok Das
Actually, there was a small shutdown in NRL of about 10 to 15 days. So, as a result of that, there has been a slight decline in the sales of crude oil, although there has been improvement in production.
Kirtan Mehta
And will we be able to sort of offset that additional inventory during the next quarter? So would the crude oil sales be higher by that amount?
Sachidananda Maharana
Crude oil sales will improve because unless there is shutdown, there is no question of crude oil sales going down.
Ashok Das
Demand for oil is there, but refinery offtake depends on their operational issues and all. So, if they don’t have any issues, from our side, we will be able to kind of create sales for us.
Kirtan Mehta
Right. And what would be our FY ’25 target for the crude oil? Would it remain unchanged?
Saloma Yomdo
Yes, for the current year, the target — actually, we have created our own revised target. No, it will be 3.6 tonnes — close to 3.6 million tonnes, yes, 3.56 million tonnes or something.
Kirtan Mehta
3.56 million tonnes for the crude oil, and natural gas is 3.2 to 3.3 BCM, correct?
Saloma Yomdo
Yes.
Rupam Barua
So, our achievement would be a little higher, close to 3.45 million tonnes [Speech Overlap] close to 3.5 million tonnes, 3.45 million tonnes will be our achievement in the crude oil, 3.45 million to 3.5 million tonnes maximum.
Kirtan Mehta
Thanks, sir. Could you also highlight the progress on the Indradhanush Gas Grid? Is it likely to get completed by December ’24?
Ashok Das
As far as phase one is concerned, that is about 385 kilometers, which is running from Guwahati to Numaligarh, that has already been mechanically completed, okay? And nitrogen, this feeding has already been done for about 280 kilometers or something. And by December, they are saying that they will be able to start off with this Phase 1.
Kirtan Mehta
And for sort of the additional customers that we will be adding alongside the Phase 1, have we already entered into the agreements with them now?
Ashok Das
Phase 1 — see, Phase 1 is — since running from Guwahati to Numaligarh, so that line will not have any impact as far as Oil India is concerned, because Oil India up to Numaligarh is catered by DNPL, which is also under upgradation and augmentation. So, as far as up to Numaligarh line is concerned, definitely they must be having some talk with GAIL with regard to the customer arrangement and all.
Saloma Yomdo
So, with GAIL, we are having some talks.
Kirtan Mehta
For our perspective, which is the line which will — when would the sort of the augmentation of the line would help us to start increasing the volumes?
Ashok Das
Yes. As far as Oil India is concerned, because we should be capable of evacuating the gas, which is there with us in the Duliajan region, okay? So, as far as that gas is concerned, that we’ll be able to evacuate once there is another line of about 116 kilometer, 24-inch line, which will be coming from [Indecipherable] up to Duliajan. But that will be an additional line. So once that line comes up to Duliajan, then we will be able to push the gas from Duliajan to our fullest potential.
Kirtan Mehta
And could you also share the current status on that line and the target dates for completion?
Ashok Das
That is about two years. Within two years’ time, they are going to make it happen.
Kirtan Mehta
So, for the next couple of years, would this mean that our natural gas production will remain more or less flat until and unless this line is complete?
Ashok Das
That may not also be a correct statement for the reason that because DNPL line is also under augmentation, and as you are aware, because Numaligarh Refinery is under expansion. So their expected date of completion is December 2024. So once this new refinery comes into full stream of operation, they will require additional gas, which they are — as on date, they are taking 0.9 to 1 MMSCMD. So, that will ramp up to 2.5 to 3 MMSCMD. So, as a result, we cannot say that we have to bank on this IGGL only to increase our production.
Kirtan Mehta
So NRL will be the key — one of the key customers where we will see the offtake increase. And about the DNPL line, what would be the status and when is it likely to get…
Ashok Das
DNPL line is going ahead with two phases, Phase 1 and Phase 2. Phase 1’s expected completion is March ’25, and Phase 2 is March ’26. So that is a INR433 crore project that is also going ahead.
Kirtan Mehta
Right. And what would be the sort of the offtake addition with the completion of Phase 1 in March ’25?
Ashok Das
March ’25, what would be the off-tech? That I…
Sachidananda Maharana
As far as the Numaligarh Refinery, the commissioning target is December ’25. So the first phase of this DNPL line, the total capacity, the increased capacity requirement for the Numaligarh Refinery is expected to be around 3 MMSCMD. Out of that, one we are already transporting with the existing capacity. So the target is that by last quarter of next financial year — I mean, the next calendar year, the DNPL first phase line will be activated. And because the mechanical completion will take some time, so by the time that DNPL line increased capacity of 2 MMSCMD comes into play, that will directly meet the increased requirement of Numaligarh Refinery. So we can say, expect that the increase in volume may start from the last quarter of next financial year for the DNPL pipeline.
Kirtan Mehta
Right. So then, the understanding would be basically this year’s target and even the next year’s target will be more or less flat, but we’ll see a material increase in the gas offtake by around 2 MMSCMD as and when NRL starts taking the additional gas. Is that the right understanding?
Sachidananda Maharana
Absolutely. And ’26-’27 onwards, we can expect a substantial increase because then — by that time the IGGL — yes, the capitalization and also — the connectivity will increase. All the different gas grids that is developing in the Northeast region, they are also working parallelly. So the IGGL connectivity, that will enhance oil — crude oil — gas production will basically serve the different gas grids under the CGD regime that are getting developed. So it will be the feeding line for all those CGDs across the Northeast.
Kirtan Mehta
Right, sir. Just one more question in terms of, could you also update on the progress on the NRL Refinery? And how are — what are the next milestones to track before sort of the commissioning of the refinery expansion?
Sachidananda Maharana
Yes. As far as refinery expansion project is concerned, they have already achieved about 70% physical progress by now, and about more than INR20,000 crores of capital — capex has already been achieved out of INR28,000 crores.
Kirtan Mehta
And the target date still remains at December ’25, it will be commissioned?
Sachidananda Maharana
Absolutely.
Kirtan Mehta
Is that a mechanical completion date? Or is that the sort of the commissioning date?
Sachidananda Maharana
That is the commissioning date.
Kirtan Mehta
So, basically, pre-commissioning activity would start sometime in the first or second quarter of the FY ’26?
Sachidananda Maharana
Yes. No, see, the moment the refinery is completed mechanically, it will not start in full swing from the day one. So, that will progressively increase. So, say, initially, it might be starting with 50% to 60% capacity, next year going up to 75% and finally reaching 100%.
Kirtan Mehta
Right, sir. Thanks for such detailed answers. Very helpful. I will go back in the queue.
Sachidananda Maharana
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Vidyadhar Ginde from Sohum Asset Managers Private Limited. Please go ahead.
Vidyadhar Ginde
Yes, thank you. Good morning. So it appears that your oil and gas production increase is mainly constrained by demand. And so, as some pipelines get commissioned, Numaligarh Refinery expansion gets commissioned, your production will increase. So my question was that do you — Numaligarh Refinery expansion from 3 million tonne to 9 million tonne, even probably selling that 9 million tonne also is probably — demand for final petroleum products also is likely to be constrained. So is it easily possible for Numaligarh Refinery to ramp up to — whenever possible to 100% in two, three years or demand constraints — or is there a pipeline which can take the final — the finished products from Northeast to other parts of India?
Ashok Das
Sir, as far as the pipeline product evacuation part is concerned, there are two issues here. Are you talking about this — their raw material procurement side or you’re…
Vidyadhar Ginde
No, I am talking about finished — my question really is that I am not very sure whether there is additional demand within Northeast for another 6 million tonnes, whatever production, 5 million tonne extra production. So, that is the question. So can you produce that much and send it elsewhere in India? That is my question.
Ashok Das
As far as that part is concerned — the product evacuation part is concerned, you are very correctly raising the question that whether this additional capacity, how it is going to be evacuated. As of now, if you are — you are aware probably that our pipeline is being used by Numaligarh Refinery for evacuation of their products from Northeast to — up to Siliguri. But that existing pipeline having — is having a capacity of 1.7 MMTPA. And that pipeline is being augmented from 1.7 MMTPA to 5.5 MMTPA. That is under progress. And that is — that particular augmentation project is also going to coincide with the completion of the refinery expansion. So automatically, the additional capacity is being created to cater to the additional requirement of Numaligarh Refinery when once their — this capacity expansion is complete. So, automatically, their additional product will mostly be evacuated through our pipeline only, which is under augmentation.
Vidyadhar Ginde
So this Siliguri, once the production — this incremental capacity expansion to Siliguri happens, can it go all over India wherever it wants to go? So is there…
Ashok Das
Yes. Numaligarh Refinery is also creating facilities in Siliguri terminal for additional tankages and loading-unloading facility, etc. So from there onwards, the products will move through either tankages [Phonetic] or railway rack [Phonetic] as of now. And they are also planning to put in place some pipeline, which will be able to take the products up to the high-demand areas in the Eastern region [Phonetic].
Vidyadhar Ginde
That pipeline, you will put or IOC or somebody else? Who is going to put that pipeline?
Ashok Das
No, that pipeline will be put by Numaligarh only. So they are on — this is under planning right now.
Vidyadhar Ginde
Okay. No problem. So basically, you are saying that because the pipeline to evacuate additional production is also going to be commissioned along with the refinery, as and when the refinery stabilizes, it can ramp up over a two-year, three-year period to 100%, and therefore, to that extent, your oil demand and gas demand will go up?
Ashok Das
Yes.
Vidyadhar Ginde
Yes. So that was — my second question was on your gas production. Like some of your gas production is potentially eligible for this ’25 — is any of your gas production that’s going to happen in next two, three years eligible for this higher — 20% higher gas price? And if — that is what — can you give us some color on what proportion of your FY ’26 or ’27 production could be eligible for this higher gas price?
Saloma Yomdo
Yes. I think the $6.5 cap is for the APM gas. But as per the directive of the government, from April ’23 onwards, whatever additional activity you do on the new gas that you produce, you will get a premium of 20% over the $6.5 cap that you have. And so, we are working out various modalities like which are the fields, which are the wells from which this gas will be qualified as the premium gas. And as of now, there are still some big technical issues [Phonetic] which need to be sorted out with the regulatory body, which is the Directorate General of Hydrocarbons. And once that is sorted out, we will be able to come up with the exact figures like which are the gas and how much of the gas is currently available for the premium price. I think we don’t have it right now, but because of this…
Vidyadhar Ginde
So whatever increase in production will happen from here on, it will be, in any case, entitled to the higher gas price, is it? Because you are also guiding a big jump in your gas production in any case.
Ashok Das
[Indecipherable] that gas has to be produced from a new well or production through new well intervention. So, if that happens, then even if we are producing from our own nomination fields, that gas will fetch higher price in the form of premium of 20%.
Vidyadhar Ginde
So, do you have any idea as to what proportion of your production in say FY ’26 or ’27 [Speech Overlap]?
Ashok Das
We are working on it as of now. We are thinking of finding out those areas from where the production will qualify for the premium gas. That is currently on…
Vidyadhar Ginde
So, when can you give a better color? Will it take a few quarters for you to give us a more clear idea on that, on how much of your production? When do you think you would be able to guide us on what proportion of your output will get higher price?
Sachidananda Maharana
See, data is being shared with the ministry from time to time based on the requisition which is from the ministry for their report to be finalized. So, once the report comes, then only that quantification part will be possible. So, before that, it is better not to give any mention of quantification, right?
Vidyadhar Ginde
No, thanks a lot, and all the best.
Sachidananda Maharana
[Indecipherable] actually. So, this is going to [Indecipherable]. The amount of new gas will increase only day by day because we are in the — we are going [Indecipherable] we are going for new interventions. That is for sure. Only thing is that we are not able to tell you the quantity as of now because there are many [Indecipherable].
Vidyadhar Ginde
Thanks. Sir, just if I could add one more question, so how much of your — most of your incremental oil, I presume, goes to Numaligarh. But in case of your incremental gas, 5 BCM, which you are talking of, what proportion of this incremental gas is going to Numaligarh for the expansion?
Sachidananda Maharana
That part I had already mentioned that Numaligarh Refinery is presently picking up about 0.9 to 1 MMSCMD of gas from us.
Vidyadhar Ginde
Okay. So which are the other big consumers potentially?
Sachidananda Maharana
For expansion in capacity, they would be requiring 2.5 to 3 MMSCMD.
Vidyadhar Ginde
Correct. Now, which are other big consumers of gas, which might — over the next two years other than Numaligarh?
Ashok Das
APL capacity is likely to get increased.
Vidyadhar Ginde
So, how much more they will consume?
Ashok Das
[Speech Overlap] is commissioned, there will be larger demand from the CGD entities because the entire Northeast, CGD blocks have already been awarded. So, once the CGD entities become functional, they [Technical Issues] our gas.
Vidyadhar Ginde
Okay. Thanks a lot. Thank you very much.
Operator
[Operator Instructions] The next question is from the line of S. Ramesh from Nirmal Bang Equities. Please go ahead.
S. Ramesh
Good morning, and thank you very much. Sir, can you give us some sense in terms of your plans in the city gas distribution and biogas? And is it going to be included in the segment called renewable energy in terms of reporting?
Ashok Das
After the 12th and 12th A round of bidding, we have actually got nine geographical areas in all. So, out of those nine geographical areas, three are already functional. Those are in Maharashtra and Haryana. That is the geographical area of Kolhapur, Ambala and Kurukshetra, where we are already producing and we have a steady market over there. In addition to that, we have got a geographical area in — yes, have a CGD in Tripura and we also have a CGD in Manipur. So, these are the — Meghalaya, I think [Speech Overlap]. So these are the CGDs where we have our own interest. And our CGDs are already in the process of laying the network there, even though the CGD — even though the IGGL network is yet to come, but we are, at our end doing everything possible so that once the IGGL network is commissioned, we can immediately draw gas from that network and run it through our own network so that we can create a market for ourselves. Parallelly, we are setting up CNG stations in those areas. I think two of the CNG stations in Tripura, which are currently being run by GAIL, we have tied up with them, and we will be supplying our gas to those CNG stations, which will immediately become functional. So, these are some of the things that we are doing in the Northeast for enhancing our sales volume.
As far as CGD is concerned, we are committed [Phonetic] to set up 25 CGD stations, out of which, what we have done so far is that we have identified a few technology partners with whom we will be setting up one CGD station in Tinsukia, Assam, that is already — that has reached some level of finality. And other CGD stations also, we are thinking of setting up. But that would take a little bit of time because CGD has to be spiked with the natural gas. Those things we are currently working on, and possibly in the days ahead, we will be able to come up with some additional information on this.
S. Ramesh
Okay. So, out of these nine GAs, how many GAs are on your own stand-alone, how many [Indecipherable]?
Ashok Das
Stand-alone, none. We are having partnership with HPCL mostly. And in the Arunachal GA, we are having partnership with BPCL.
S. Ramesh
So, in terms of your capital allocation, you have shown about INR2,000 crores of capex, out of which INR1,400 crores is for your E&P business. So, where is this E&P capex going? And can you share how much of that will be for these nomination blocks where you can get 20% premium? So, although you may not be able to give the volume on which you will get that 20% premium, you would have done some basic working for the internal rate of return, right? So, if you are spending so much of money, is it possible to say how — where this INR1,400 crores and the other capital expenditure is going based on whatever you have shared?
Ashok Das
Your question is on capex?
S. Ramesh
Yes. The cash flow, you have given INR1,400 crores for E&P and other capital expenditure of INR4,700 crores, can you share where it goes…
Ashok Das
You cannot really zero in on any one particular area. It could be oil. It could be gas. It could be other areas as well. Now your question is specifically on gas, I believe. Is that your question?
S. Ramesh
Sir, you are spending INR6,000 crores. You already spent INR6,000 crores in first half. So, if you can share what is the split for this capex in terms of the projects on which you are spending, it will be useful for us to understand which business you are investing in.
Ashok Das
Just give us a moment.
Rupam Barua
See, the last — next three years, capex projection for Oil India on stand-alone basis will be in the range of around INR6,000 crores to INR7,000 crores. And on the group basis, if you consider Numaligarh Refinery, it can be around INR10,000 crores to INR12,000 crores. Now, out of the INR6,000 crores, the — mainly, if you see the spend, our — around 75% of the capex is directed towards the upstream initiatives of the Company. And the balance, we are, on a phased way, allocating towards the other initiatives and also including the renewables, the CGDs — the CGD space, — there are partial allocations towards this space also.
Now, on the upstream initiative part, as you will be knowing that we have got acreage of around 50,000 [Phonetic] square kilometers plus under the OLAP regime. And in many of the areas, we have already completed the assessment part. And we have got extensive drilling plans. And I just like to highlight that our target for this year is almost around 70-plus wells. So, a lot of capex is diverted towards the upstream part for the development drilling and also exploratory drilling. And you will be aware that OIL is now planning for the offshore drilling in Andaman. So, the Andaman — there will be a part allocation to the Andaman offshore initiative as well out of the current capex. So, for a broader guideline, you can say that around 75% is towards the upstream initiative, which will include drilling plans in our Northeast in the main producing area, in the different other regions like Rajasthan and also in Mahanadi Basin and 1% in particular — a few of the wells in the offshore region of Andaman. And so, we are targeting in Q4 to start the drilling in Andaman.
Sachidananda Maharana
Mid-November.
Rupam Barua
Yes, mid-November, we are starting the drilling activity in offshore Andaman.
S. Ramesh
So, how much of your E&P capex out of the 75%…
Rupam Barua
Yes. So, you want the hard numbers? What do you want exactly?
S. Ramesh
Yes. So out of the 75% you’re spending spending on the upstream…
Ashok Das
See, broadly, as my colleague has explained, we will be spending about INR7,000 crore in the current year. The heads are seismic survey, exploration, drilling, development. Then we will be investing in our subsidiaries. As I have explained, we have about 25 CGD stations to be set up. So, all of these will be spent on these heads. My exploration cost would be more than INR2,000 crore. My development would be close to INR1,400 crore — a little more than INR1,400 crore. Other oil and gas facilities, etc., will attract another INR2,300 crore. This is the broad breakup of the INR7,000 crore that we are projecting.
S. Ramesh
Yes, understood. Just to get some perspective on Vidyadhar’s question on the potential for additional production from the nomination wells for getting that 20% premium, is any of this development expenditure going towards the increase in production in new wells or additional well interventions in the nomination blocks? Just to understand what your thought process is there.
Ashok Das
What we are currently doing is that we are in the process of exploring those areas, which will be — which will qualify as new wells or those are through new well intervention. Actually, we will have to kind of qualify those two conditions to get that extra premium. If that doesn’t happen, then our gas will be like normal gas. So, that would take some time. However, monies will be spent on new wells as well.
S. Ramesh
So, how much of that expenditure will be in the new wells? Just to understand.
Saloma Yomdo
No, like our [Indecipherable] mentioned that in ’24-’25, exploratory drilling of INR2,000 crores is projected. So, this exploration drilling doesn’t necessarily mean rank exploration in new areas. So, what we do is, chunk of our exploration, we also do in our nominated regions in terms of near-field exploration. And therefore, you will see that the exploration wells that we drill are not only in the rank exploration areas or in the OLAP blocks, but it’s also qualified exploration for near-field exploration. And that’s why in the near-field exploration in the nominated regions itself, you will have some exploration wells, and chunk of the development wells, where it is earmarked as INR1,400 crores is the budget. Now, for development drilling, you know that 99% of the crude oil comes from nominated regions in the Northeast apart from about 600 barrels from Rajasthan. So, majority of the development drilling will also be held in the nominated blocks in Assam and Arunachal. And all these wells which will be drilled as development wells or exploration wells in the nominated regions will be eligible — the additional gas will be eligible for the premium 20% gas.
S. Ramesh
Okay. So, your capex provides for some capital expenditures in the nomination block. That’s why I wanted to confirm. Thank you very much.
Saloma Yomdo
Yes. Actually, majority of it will be there only.
Unidentified Speaker
[Speech Overlap] gas actually. At least, we have always had mostly around three non-accessible [Phonetic] in our GDP [Phonetic], around three — minimum three non-accessible gas we’ll target. So, nuclear, if you talk about — in addition, we generally target three [Indecipherable].
S. Ramesh
Thank you very much. I’ll join the queue.
Operator
Thank you. [Operator Instructions] The next question is from the line of Mayank from Morgan Stanley. Please go ahead.
Mayank Maheshwari
Hi, sir. Thank you for doing the call. I had a follow-up question on the capex itself. Can you just — I think you gave a bit of detail around the breakup of the capex that you’re doing. But can you also give us a bit of a breakup of how much goes into Rajasthan, what goes into Assam, Duliajan, and what will kind of go into Andaman that you’re kind of planning and how much could be of — overseas that you’ll have to do your equity contribution as?
Rupam Barua
So, if you require such a detailed breakup in terms of the areas where this capex is going to be spent, so, that can be addressed separately. We do not — we are not readily prepared with that breakup as of now.
Mayank Maheshwari
Okay, sure. So, I think I’ll just follow up on that. The second thing was in terms of your NRL capex, you said INR200 billion of the INR280 billion has been spent, correct?
Rupam Barua
Yes.
Mayank Maheshwari
Can you just give us the total net debt that you have now sitting at NRL’s balance sheet?
Rupam Barua
NRL debt is — right now, it is more than INR11,500 crores.
Mayank Maheshwari
Okay. All right. Perfect. So, that’s all the questions I had. Thank you.
Rupam Barua
Yes, thank you.
Operator
Thank you. The next question is from the line of Sabri Hazarika from Emkay Global Financial Services. Please go ahead.
Sabri Hazarika
Yes. Sir, just two questions. So, firstly, I think your provision in this dry well, that went up by around INR200 crores quarter-on-quarter. Can you tell us exactly in what asset this has happened?
Rupam Barua
Can you — actually, your voice was not very clear. Can you…
Ashok Das
Sabri, I got to know what you want to understand actually actually. Actually, this quarter, we have taken a write-off of about INR72 crores on account of a well sitting in Puri, okay? That is INR72 crores is the straightaway write-off. And apart from that, another INR270-odd crores, yes — INR297 crores, we have taken provision in respect of starting wells.
Sabri Hazarika
In respect of which well?
Ashok Das
There are about five wells we have taken provision of about INR297 crores. So, that includes basically one well in Moran, one well in South [Indecipherable], one in [Indecipherable], one in Ashoknagar, one is Malikbaria. So these are the five wells against which about INR290-odd crores has been taken as provision. Apart from that, write-off [Phonetic] of INR72 crores on account of that Puri well.
Sabri Hazarika
Puri well is part of OLAP, right? And the others are like part of nominated, right?
Unidentified Speaker
Some are NELP block.
Ashok Das
Some of them are NELP blocks.
Unidentified Speaker
[Speech Overlap] These are NELP blocks.
Saloma Yomdo
With ONGC.
Unidentified Speaker
Where ONGC is our partner. And one, I think, is an OLAP block. That is [Indecipherable]. And rest are nomination areas.
Saloma Yomdo
Two nominations.
Unidentified Speaker
Two nominations.
Sabri Hazarika
Got it, sir. And sir, just a small question. You mentioned Phase 1 and Phase 2 of DNPL. So Phase 2, I could understand by 2026, the entire [Indecipherable] will get augmented. Phase 1 will be what, by 2025 March, what are we trying to achieve in Phase 1 [Speech Overlap]?
Ashok Das
Phase 1 is basically having a scope [Phonetic] of 55-kilometer area. And apart from that, in the Phase 2, there are many other lots, which are lined up. That will give the final step to the project, actually.
Sabri Hazarika
55-kilometer, does it connect to any major customer? Or it’s like…
Ashok Das
That is only exclusively for DNPL, right? That is normally there.
Sabri Hazarika
Okay. No, I mean 55-kilometer is not like — I mean, I was just wondering, with 55 kilometers, can we have any incremental volumes [Speech Overlap]?
Debojit
Sabri, just to explain — this is Debojit [Phonetic] here. Just to explain, actually, this DNPL project, it is — one part is the expansion of the capacity, and one part is basically an upliftment of the current facilities based on certain observations and some extensive repairing activities also that was taken up within the same project. So, the project is, that is why, phased into two phases. First, the first repairing and — major repairing part will be carried out. And then at the same time, capacity expansion part is also simultaneously going on. The repairing part will be completed in the first leg, basically. And then the capacity expansion is tied up in sync with the expected date of commissioning of Numaligarh Refinery. So, what we expect is that by the end of next financial year, by mid, the first phase will be over. But that will not help OIL to enhance the capacity because this is a stand-alone line going for feeding NRL’s gas requirement. So, once the entire project gets completed towards the latter part of next year, then the additions of gas evacuation will start once Numaligarh Refinery commissions and gradually gets stabilized.
Sabri Hazarika
Got it, sir. Very clear, sir. Thank you so much.
Debojit
Thank you.
Operator
Thank you. The next question is from the line of Hardik Solanki from ICICI Securities. Please go ahead.
Hardik Solanki
Yes, hi, sir. My question already got answered. Thank you for the opportunity.
Operator
Thank you. The next question is from the line of Kirtan Mehta from BOB Capital Markets. Please go ahead. Mr. Kirtan, your line has been unmuted. Please go ahead with your question.
Kirtan Mehta
Thanks for the one more opportunity. Just one question to understand the capital intensity of the well workover programs and new well programs that we are doing. Would you be able to highlight how the capital intensity or our capex efforts have ramped up in the nomination block?
Debojit
So, actually, as far as exploration and development programs are concerned, we earmarked more than 55% to 60% of our budget total capex on account of addressing those exploration and development activities. So, right away, I don’t have the exact breakup of what you are asking. But as far as capex, this splitting is concerned, more than 60% of the capex goes on account of this exploration and development efforts.
Kirtan Mehta
My question was more from the perspective that for us, basically, I think the production growth has been constrained primarily by the demand and not necessarily by sort of the additional capex investments required in the existing projects. So under — and the incentive scheme of 20% extra premium on the gas is primarily to sort of support the additional capital intensity in the legacy field. So, is it really applicable for us, this new well gas provision, because our capital intensity is not really sort of rising?
Debojit
As far as crude oil production is concerned, the demand is not constrained by capex, obviously because — sorry, the demand is not constrained — the production is not constrained by the demand because as you know, Northeast is having more than 7.5 MMTPA of capacity, refining capacity, whereas the total production in the Northeast is about 4 to 4.5 MMTPA. So, there is a surplus capacity available. So, the moment I can produce, my guess is that crude oil will immediately find its goal. So, there is no difference as far as crude oil is concerned. But yes, as far as gas is concerned, the production is constrained by demand as well. But demand can be unlocked the moment these facilities are in place. And majority of the facilities are in terms of this IGGL completion and DNPL completion, not necessarily at our end.
Saloma Yomdo
No, there is another thing that we are also trying to implement. That’s why — and I think Oil India is going to be the first in the country to do it. Actually, we have done it earlier as well. Now, in order to address this issue of constrained production because when we produce gas, in some of the fields, we also produce some bit of condensates along with the gas. So, if I have to shut down a couple of gas wells because of low upliftment by the customers, I’m also losing out on some of the production of oil in terms of the condensate which comes along with the gas. And therefore, we address this problem. Of course, the IGGL line will come. It will take another couple of years. But we cannot afford to lose even a single drop or barrel of oil. And that’s the reason we have taken up this initiative that we will have a facility for underground gas storage. So, this is something which is — which we are planning to undertake on a war footing. And we have already identified a couple of wells or reservoirs where we will try to implement this strategy. And so, whenever there is a shortage or there is a requirement for curtailing our gas production, we will not curtail per se, but we will still produce and we will still produce the oil — additional oil also with the gas. And whatever gas gets produced, we will inject it back to the reservoir for storage. It’s like an oil storage, but here, we are talking about the gas storage. And later on, when the demand requires, we can even produce back the reservoir. So, this unique concept we are, I think, going to implement, we are going to be the first in the country to do it. ONGC is also eyeing for it. But then, these are a few of the steps that we are already taking so that our production levels are sustained at the desired levels. Okay?
Kirtan Mehta
Thank you, sir, for this color.
Operator
Thank you. The next question is from the line of Somaiah from Avendus Spark. Please go ahead.
Somaiah Valliyappan
Thanks for the opportunity, sir. Somaiah here. First question, sir, in terms of the 30% equity contribution for NRL expansion capex, how much have we contributed so far? How much remains?
Rupam Barua
We have already contributed about INR1,100 crores.
Somaiah Valliyappan
Sorry? We have contributed so far INR1,100 crores?
Ashok Das
INR1,100 crores, we have already contributed.
Somaiah Valliyappan
Sorry, sir. Your voice is not clear.
Unidentified Speaker
INR1,100 crores, we have already contributed.
Rupam Barua
Yes, basically, as the promoter’s contribution, our total commitment towards the NRL project is INR2,200 crores, and this is splitted [Phonetic] into four cash calls. So, first two cash calls, actually, we have already paid INR550 crores. So, the total cumulative investment as a promoter to the refinery capex for the project is INR1,100 crores, as on date. The third cash call also we have received, and that will be disbursed sometime by December. So, by the end of this financial year, up to December, INR1,100 crores plus INR550 crores. And then, based on the development of the project, as and when we get the balance cash call request from the refinery, that will be paid. Our total commitment is INR2,200 crores.
Somaiah Valliyappan
Okay. And also, capex for NRL, let’s say, after next year, when the expansion is partly done, what will be the capex run rate post that?
Rupam Barua
See, NRL capex, actually, the total refinery project cost is INR22,000 crores. And that is — again, is getting revised. Of course, the formal approval is awaited. But it is expected to be around INR33,000 crores — INR32,000 crores. Now, there is already a debt arrangement of INR18,000 crores by the refinery. And the increased cost will be made from some additional debt drawdown, as well as maybe some additional internal accruals also may contribute to that. Now, as we have already mentioned that the total draw that has been done is around INR11,000 crores out of the INR18,000 crores capacity. The capex, that is for ’24-’25, they have planned a phase-wise capex. And for the current year, ’24-’25, the capex is — planned capex is around INR10,000 crores. And it will be in that level for the next year also because they have to complete — the target is to complete the refinery by December ’25.
Somaiah Valliyappan
Okay, sir. Sir, one clarification here. So the revised capex for NRL expansion will be INR32,000 crores, that’s the updated number?
Ashok Das
That is awaiting ministry approval. So what is approved as of now is INR28,000 crores. There is a revision. The revision proposal is with the ministry. The approval is yet to be received.
Somaiah Valliyappan
Okay, sir. Sir, also, I was just trying to understand, post expansion, once all the 9 MMT comes up, fully ramped up, what will be the run-rate capex required for NRL in case we have?
Debojit
See, actually, Numaligarh Refinery is having another project in hand. That is the PetChem project. So, for that project also, they have received the approval, and that will be around INR7,000 crores. And this PetChem project is actually — a few of the physical activities are simultaneously done with the refinery project itself because it is an integrated project. Most of the refineries are taking up this kind of project now considering the change in the scenario. And so, what you can see that, yes, after the 9 million capacity is reached, definitely the refinery have to give more focus on streamlining the inward supply chain, outward supply chain for the 9 million refinery. But at the same time, the next capex — major capex that is in plan is the PetChem project. The approved cost for that is INR7,000 crores, and the time requirement is three years from the approval date. And the approval is, what we have understood is, recently received. So, you can say that in another three years’ time, the PetChem project will come up. And it will be freezed depending on the funding availability, how the additional capacity is marketed. So, it will be a combination in that way. But if you ask me what is the next phase of capex, that will be the PetChem project, which is INR7,000 crores capex.
Somaiah Valliyappan
Got it, sir. Sir, what will be the product line in this PetChem project? So, would it be [Indecipherable]? What is that…
Debojit
On the technicality part, we cannot comment right now.
Ashok Das
[Speech Overlap] 360 KTPA project. Capacity is 360 KTPA.
Somaiah Valliyappan
Sorry, capacity is?
Ashok Das
360 KTPA, yes.
Somaiah Valliyappan
Okay. Sir, also, just a couple of clarifications. One, this new well intervention gas pricing, so does this $6.5 ceiling apply to this? Or is it just that 10% of crude and then a 20% premium to it? How does it…
Ashok Das
As per our understanding, premium will be charged on the ceiling, which is $6.5 because otherwise, you don’t gain anything. If the premium is charged on any price lower than $6.5, then possibly the [Multiple Speakers].
Somaiah Valliyappan
I was looking at — I mean, there is another possibility that if the ceiling is not applied and the crude is at $75…
Ashok Das
As far as that pricing is concerned, that is not for nomination blocks of OIL and ONGC. So, for OIL and ONGC nomination blocks, they are maintaining a cap. And that cap is valid till 31st March 2025. Yes, from April 2025, we will be getting $0.25 premium over and above this $6.5. So, we’ll be ultimately getting $6.75 coming April. So, as far as the premium 20% is concerned, as far as our understanding goes, that will be applicable on the $6.5 as of now.
Debojit
I just would like to also highlight one point. Of this capex, the one part is targeted towards our main producing area, the nomination field, and one part is for — towards the OLAP regime, the blocks that we are having under OLAP regime. Now, if we have any gas discoveries in the OLAP regime, then the price restriction is not applicable for that part of the gas production. So, I think in your number simulation, of course, it’s an ongoing process. I think it takes around typically five to 10 years. But what we’d like to highlight is that not the entire capex is going towards only towards this $6.5 or 20% premium. Part of the capex is also moving towards the OLAP regime, where the gas, if we have any discovery, that will be at a very higher price. There is no $6.5 restriction.
Unidentified Speaker
[Speech Overlap] marketing freedom in respect of the gas produced from those areas. If it is DSA [Phonetic] or if it is OALP, so there is no restriction.
Debojit
And going forward, say, after another two, three years, once the IGGL line comes and we are connected to the national grid, then we also have — we can also see the opportunity of connecting additional gas to the IGGL platform, so — because that gas demand is always there, we are also in touch with the IGGL team. So, all these additional avenues will come once the IGGL connectivity and the entire Northeast connectivity with the national grid is achieved.
Somaiah Valliyappan
Got it. Thank you.
Operator
Thank you. Ladies and gentlemen, we’ll take this as the last question. I now hand the conference over to the management for closing comments.
Sachidananda Maharana
This is the last?
Operator
Yes, sir.
Ashok Das
So, thank you very much, Antique, for organizing this con call interaction. We are — we hope we have been able to satisfy the queries of the parties, and thanks once again. Thank you.
Operator
[Operator Closing Remarks]