Let’s find out why this PSU has been surging in such a volatile market!

Oil and Natural Gas Corporation Ltd (ONGC) is India’s largest oil and gas producer which has a share of nearly 73% of India’s total crude oil production and 79% of natural gas. (This includes shares of joint ventures).

Crude oil is the raw material used by downstream companies like IOC, BPCL, and HPCL (subsidiary of ONGC) to produce petroleum products like Petrol, Diesel, Kerosene, Naphtha, and Cooking Gas-LPG.ONGC has a unique distinction of being a company with in-house service capabilities in all areas of Exploration and Production of oil & gas and related oil-field services. Recently the stock price of this company has seen nothing but gains.

Here are a few reasons:

Crude oil prices have shot up because of the supply chain disruptions arising from the Russia-Ukraine war and tensions from a ban on Russian oil and natural gas. Higher crude oil prices have helped to realize the real potential of ONGC and boosted its profitability. In addition to this Natural Gas prices have also surged and this momentum might continue in the near term. Leaving the global scenario aside, the company itself is exploring new areas.

On 25th April, it commissioned two projects costing Rs 6000 crore to add 7.5 million tons of oil production and 1 billion cubic meters (BCM) of gas output over the life of the Mumbai High fields. Rs 3,740 crore spend has been made on a state-of-the-art 8-legged water injection-cum-living quarter platform, as part of the Mumbai High South Redevelopment Phase-IV, while Rs 2,292.46 crore have been spent on Cluster-8 marginal field development project at Mumbai High. The project will result in an incremental gain of 3.20 million tons of oil and 0.571 BCM of gas.

On 28th April, ONGC signed a two-year Memorandum of Understanding (MoU) with Equinor ASA, the Norwegian state-owned multinational energy company for collaboration and partnership in areas of upstream Exploration & Production, midstream, downstream and clean energy options, including Carbon Capture Utilization & Sequestration.

On Thursday the share price of ONGC was Rs 164.95 witnessing a 1.66% gain. The stock has a 52-week high of Rs 194.60 and 52-week low of Rs 108.50.