Shares of state-owned Oil and Natural Gas Corporation (ONGC) hit a one-year high Tuesday on rising oil prices, and after reports said that the firm was readying paperwork to award multiple engineering contracts to replace its pipelines this year.
The stock zoomed 10% to INR162.35 ($2.18) in afternoon trade on the National Stock Exchange (NSE), a day after the cost of a barrel of crude rose to a seven-year high of $78.17 on the New York Mercantile Exchange, while the Brent international benchmark traded at a three-year high of $81.48.
Oil prices have risen in the wake of limited increases to global production by the cartel Organization of the Petroleum Exporting Countries or OPEC, reported The Economic Times.
West coast upgrade
ONGC also gained from the news that the energy giant would hire a contractor to replace 256 kilometres of pipeline, the first of several upgrades along India’s west coast worth over $1.25bn, as per a report published on Upstream’s website.
The upgrade is part of the INR313.5bn annual outlay that will see ONGC procure, erect and maintain equipment and infrastructure in the business year through March 2022.
Around 256kms of pipes, under the delayed Pipeline Replacement Project VII (PRP-7), would be installed in 39 pipeline segments across ONGC’s Mumbai High, Neelam and Heera, and Bassein and Satellite assets.
Scope of work includes demolition of redundant risers and modifications to several structures. Bids from domestic and international subsea construction firms are expected this November, Upstream added.
ONGC has a market capitalisation of around INR2.02trn. The counter has gained some 73% so far this year.
What is your sentiment on Natural Gas?
In a July statement, India’s largest oil and gas producer said it would spend INR155bn on lumpsum turnkey projects during fiscal 2021-22, in addition to INR136bn on major services and INR22.5bn on major material procurement.
The tendering process for PRP-7 was cancelled in 2020, in the wake of the Covid pandemic.