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Oil and Natural Gas Corporation Ltd
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Good evening, ladies and gentlemen. I'm Vidya, moderator for the conference call. Welcome to ONGC's Q3 FY '23 Earnings Conference Call. We have with us today Mrs. Pomila Jaspal, Director Finance and her team, who will interact with investors and analysts to discuss ONGC Q3 earnings. [Operator Instructions] Please note, this conference is recorded. I would now like to hand over the floor to Madam Pomila Jaspal. Thank you, and over to you.
Thank you. Good afternoon, ladies and gentlemen. Just to introduce myself, I am Pomila Jaspal, Director of Finance, ONGC. I welcome you all in this ONGC earnings call for the quarter and 9 months financial year '22, 23.
Thank you all for joining us on the call. I am joined here by my colleagues, Mr. K.C. Ramesh, Chief Accounts and Financial Reporting Services, Mr. Pawan Aggarwal, Chief Corporate Planning and Strategy; Mr. Sanjay Bharti from Corporate Accounts section, Mr. Vinod Hallan; Mr. Chandrasekhar from ONGC Videsh Limited; and Mr. Prakash Joshi from Investor Relations and Corporate Budget.
As you know, ONGC has compiled its financial result for the quarter and [Technical Difficulty] ended 31st December '22, which have been reviewed by the statutory [Technical Difficulty]. The financial results have already been released on 14th February '23 through a press note and sent to the stock exchanges. This has also been sent to the analysts who are there on our mailing list.
Here is a brief synopsis of the results. The company has earned a net profit, that is profit before tax of -- a profit after tax of INR 11,045 crores during the third quarter of financial year '23 as against INR 8,764 crores during the third quarter of financial year '22, an increase of INR 2,281 crores, that is 26%.
The profit after tax for 9 months for financial year '23 has increased by INR 7,631 crores. That is 24.3%. That is from a profit after tax of INR 31,446 crores, in 9 months financial year '22 to INR 39,077 crores in 9 months financial year '23.
The increase in net profit during the current quarter and 9 months period financial year '23 is on account of higher sales revenue mainly due to higher crude oil, natural gas and VAT price realizations. The sales revenue for quarter 3 financial year '23 and 9 months financial year '23 has increased by INR 10,020 crores, 35.3% and by INR 43,113 crores, that is 57.1% as against the corresponding quarter and 9 months of previous year.
The billing that is net of VAT and CST for crude during the third quarter of the current fiscal was at USD 87.13 per barrel as against USD 75.73 per barrel in the same period of last year. That is an increase of USD 11.40 per barrel.
The exchange rate of rupee versus dollar stood at INR 82.20 vis-Ã -vis INR 74.96. Thus, realization for crude in rupee terms stood at INR 7,162 per barrel in quarter 3 financial year '23 with [Technical Difficulty] [ $5,677 ] per barrel in quarter 3 financial year '22, which amounted to an increase of INR 1,485 per barrel, that is 26.2% in INR terms.
Similarly, gross billing for crude during the first 9 months of the current fiscal was USD 96.99 per barrel as against USD 70.26 per barrel in the same period of last year, that is an increase of USD 26.73 per barrel.
The exchange rate of rupee versus dollar stood at INR 79.77 vis-Ã -vis INR 74.27. Thus, realization for crude in rupee terms stood at INR 7,737 per barrel in 9-month financial year '23 vis-Ã -vis INR 5,218 per barrel in the 9 months financial year '22, which amounted to an increase of INR 2,519 that is 48.3% in INR terms.
The expenditure on statutory levies, that is royalties, cess and excise duty have increased during quarter 3 financial year '23 by INR 4,152 crore that is 59.4%, and in 9 months financial year '23 by INR 17,311 crores, that is 90.7% in comparison with similar period of previous year.
This increase in statutory levies is attributable to increase in sales price of crude oil and natural gas. And levy of special additional excise duty by Government of India on production of petroleum crude at a rate revised on every fortnight based on international crude price.
This SAED, that is special additional excise duty on crude has been levied with effects on 1st July 2022 due to which excise duty has increased by INR 2,938 in quarter 3 financial year '23 and INR 9,390 crores in 9-month financial year '23.
There is an increase of INR 489 crores, that is 43.7% in exploration cost written off in quarter 3 financial year '22, '23 and INR 2,558 crores. That is 86.2% in 9 months financial year '23 versus corresponding quarter 3 and 9-month period of previous year.
This increase in quarter 3 financial year '23 is mainly due to increase in 3D seismic data acquisition equity by INR 951 crores in Western Offshore Basin and Andaman Deepwater, which is offset by INR 462 crores due to decrease in expenditure on unsuccessful well cost that is dry well off.
Similarly, the increase in 9-month financial year '23 is mainly due to increase in 3D seismic data acquisition equity by INR 1,158 crores in Western Offshore Basin and Andaman Deepwater and increas by INR 1,400 crores due to company charging of exploratory wells amounting to INR 2,140 crores lying in the fields falling under the contract areas offered under discovered small field round that is [ 3 ] by DGH and awarded to the winning bidder.
The operating expenditure has increased by INR 815 crores, that is 14.9% from INR 5,459 crores in quarter 3 financial year '22 to INR 6,275 crore in quarter 3 financial year '23.
The increase is mainly on account of increase in consumption of materials by INR 417 crores, mainly at Dahej C2-C3 plant, INR 352 crores on account of increase in price of spot LNG and foreign exchange rate transport expense by INR 97 crores; repair and maintenance by INR 60 crores and transportation of product by INR 64 crores, mainly at Mumbai Offshore.
Similarly, the operating expenditure in 9-month financial year '23 has also increased by INR 1,653 crores, that is 10.8% from INR 15,282 crores in 9 months financial year '22 to INR 16,935 crores in 9 months financial year '23. The increase is mainly on account of increase in consumption of materials by INR 334 crores, mainly at RJ-ON-90/1 block by INR 2,021 crores on account of increase in average polymer prices.
The increase is mainly on account of increase in consumption of materials. That is INR 334 crores, mainly in RJ-ON-90/1 block by INR 221 crores on account of increase in average polymer prices, repair and maintenance cost of INR 336 crores, transport expenses by INR 224 crores, workover operations by INR 137 crores, water injection by INR 218 crores due to increase in equities, mainly at Western Offshore.
The depreciation, depletion and impairment cost for quarter 3 financial year '23 and 9 months financial year '23 stood at INR 4,855 crores and INR 11,959 crores, as against INR 4,337 crores in quarter 3 financial year '22 and INR 12,446 crores during the corresponding quarter -- period of previous year.
This decrease in 9 months financial year '22, '23 is mainly due to reversal of impairment by INR 2,129 crores on certain discovered small fields of the company following under 10 contract areas, which were awarded by DGH to the winning bidders, which is offset by increase in depletion expenditures by INR 1,710 crores, mainly due to capitalization of development wells and facilities at Western and Eastern Offshore.
Well friends, with this, I finish my briefing of the third quarter results for the financial year '22, '23. We will be very happy to take questions from you. We would request you to restrict your queries on financial results only. And with this, thanking you, and thank you very much.
[Operator Instructions] The first question comes from Probal Sen from ICICI Securities.
My first question was with respect to the KG Basin asset. Earlier, briefings have indicated that the FPSO which was a critical piece of equipment, was due to be installed anytime in the next few months or was already in process.
So just wanted to get a sense if that has actually happened? And if so, then what are the time lines for production start and when can we expect more updates from this [indiscernible].
Probal, I think the specific question which you are referring to with regard to KG Basin, so let me tell you over here that the FPSO, the floating production and storage unit sailed from the Singapore yard on 21st November '22, arrived in Indian waters on 15/12/22 and sailed away from Kakinada Anchorage and arrived at offshore site in -- on 19 December '22. And hookup of [ STB BOI ] to FPSO was completed on 27 December '22. Our installation of seawater [ take risers ], et cetera, completed on 20th January, and further commissioning work is in progress.
And with this, I think most of the activities so that they are in line and we are expecting to produce the gas -- the oil to the tune of 38,500 barrels of oil per day and gas by, you can say, gas to the tune of 11 with the -- sorry gas with peak oil of 45,000 barrels in '23, '24 and likely peak gas of 11.2 million standard cubic meters per day in '24, '25.
Got it. That is very helpful. The second question, Ma'am, was about with respect to the results this time around. There seems to be an increase quite sharply in the -- both the other operating expenses as well as in raw material consumed. Any specific reasons for that? If you can...
One immediate reply, which is coming to my mind is that because our raw material contains the C2-C3 that [ which gas ], LNG, which we are buying for our C2-C3 plant, so that is coming because now with the international volatility in the crude oil prices, the LNG prices have also gone up. So we were buying this through PLL and that has also built up this increase in the feedstock prices.
And with regard to the other, you can say, operating expenditures, it is mainly because of, you can say, the -- this is mainly because of repair and maintenance of INR 60 crores, then transportation expenditure of INR 97 crores and mainly, this is because of the Mumbai Offshore. And because the market -- because of the increase in prices, the charter hire of the helicopters. So that has also become costly now.
The O&M charges, we are -- a lot of flying hours are -- they have been increased because of which the transportation expenses have increased. And the other reasons are, of course, that I have already explained to you, the foreign exchange loss is also there. So that is also adding to the increase in the cost. And our Chief Corporate accounts is here, [ Mr. Ramesh ], if we can add something on this. So that will be -- that will further explain that detail.
Yes. Like Madam has already explained the reason for the increase in the OpEx. Mainly it is, as far as the 9-month period is concerned, it is, as she explained it is in the Western Offshore, where we have increased activity in water injection, workover, repair also, we had this Tauktae, this also -- cyclone also earlier.
So we are doing certain repairs over there. So mainly with this plus the exchange loss of about INR 1,066 crores. These are the contributing factors for the increase in the OpEx.
Got it. Sir, that's very helpful. If I can ask a small follow-up. In terms of run rate, therefore, on a quarterly basis, should we then assume this as the new normal of around [ INR 5000 crores, INR 5,500 crores for this other expense going ahead, given that our activities in Offshore will only continue to accelerate?
Your question is with respect to the next financial year, are you saying that Q4 year-on-year, this would be the -- or asking for the coming quarter?
Yes. I'm saying that going forward for the next few quarters, sir, is this INR 5,500-plus crores number...
Yes, maybe around 5% to 10% plus/minus is the -- I think normally in quarter 4, we have a little more expenditure. So it could be in that range, yes.
The next question comes from Varatharajan Sivasankaran from Antique Limited.
I just wanted to check on this numbers which you gave for KG Basin, if you can provide a breakup for the current year and the next year and maybe like until we reach the peak, where is the ramp-up [ scheduled ]?
So I think I will hand it over Mr. [ Pawan Aggarwal ]. He is our Chief Corporate Planning. So he will explain further on this KG basin.
As Madam has already briefed that we are expecting our first oil by May or June 2023. And we will be getting the gas production, additional gas [ for free ] gas production in May 2024.
So during this year, financial year 2023, we will be getting an incremental oil of around 1.9 MMT and the gas to the tune of 2.8 BCM, which will be mainly the associated gas coming along with the oil.
And this will be further increased to -- in financial year '25 to 2.2 million of oil and 3.8 million of gas with the commissioning of the CPP package, which is expected in the year 2024. So these are the projections.
My second question was on Russia. If you can provide a perspective as to what is the transaction which is happening with your [ Russia ] Sakhalin asset. Sakhalin and also in the overall scheme of things, how is it proceeding with regard to despite of volumes and [indiscernible] of quarters as well as the production volumes?
Your good name?
Varatharajan.
Varatharajan, Varatharajan.
Mr. Varatharajan. Mr. Vinod Hallan is here. He is Head Financier from our ONGC Videsh Limited, so he will give you the explanation for this.
Sakhalin was put on force majeure by the operator in April. At that time, the field was producing something around 200 barrels of oil per day. And in stages, the production actually came down to 0 in September.
At that time, when the gas production was also stopped, so there was a decree issued by the Russian Federation on 7th October, taking over the operatorship and assigning it to its LLC incorporated in Russia. So that the partner -- commercial partners under the PSA are required to apply for shares in the new company.
So we applied on November 8, and our request was approved on November 9 for allocation of 20% shares. So there were some conditions precedent, which OVL is working very hard to resolve the issue. This is a question?
And the [ factor ] production.
Actually, you -- since there are production conditions precedent to be fulfilled by OVL, we have -- we are yet to receive our allocation of shares and we are not officially in the project. So we are not receiving any information on production officially from the operators.
I hope it does satisfy your answer.
The next question comes from Sabri Hazarika aria from Emkay Global.
And congratulations on good numbers. So my question is regarding FY '24 oil and gas production in general. I mean, you've got that Sagar Samrat also now installed in Western offshore. So net of KG-98/2, how are we seeing the production? And also, you said that the LNG prices were up, so that was one of the reasons for the raw material costs have gone up. And you mentioned about that polymer injection also in the Rajasthan block of Vedanta. So was there also one of the factors behind the increase in Q3 in particular, of raw material costs. These are the two questions.
In fact, Q3 -- in Q3 is at 57%. The rise in the polymer is on account of RJ-ON-90/1.
Okay. Sir, these are the two factors, both LNG as well as polymer, both of them contributed to the rail cost going...
And the water injection also.
Okay. Okay. Got it. And second is on the overall production for FY '24. Yes, any other asset also which we can look up and some increase in production from, say, Western offshore and the likes?
Yes. Mr. Pavan Aggarwal, he will give you this reply for this.
If we go by the performance of the financial year 2022, '23, we see this year as a year of consolidation, whereby we have adjusted the decline what we have been observing for last 2 or 3 years. And the next year FY '24 is going to be the year where we will be keeping the gains of our efforts, which have been ongoing for the last 2 years. So in this year, FY '23 we will be having a 1% increase in the production over FY '22. That is also after accounting the natural decline, which we are facing to up to 6% to 7% in a mature field.
Now in FY '24, we expect to have an increase of production by around 4% to 5% with the coming up of the production from 98/2 oil production and associated [indiscernible]. And we have got other projects on in the Western offshore where we will be expecting another 0.5 of the gains. So we see an increase of production in the next year.
The 4% to 5% growth will be basically on an overall basis for FY '24 versus FY '23 including KG-98/2 oil, are you saying?
That's right. Right.
And sir, just one add up. So your CapEx for 9 months. So as per government data, it is like around INR 19,000 crores, is it right or...
CapEx, basically till January -- Q3 [indiscernible] Yes. Yes. It is basically [ INR 22,058 ] till January. [ INR 2,058 ].
So this is -- so our [Technical Difficulty] of the CapEx has been to the tune of [ INR 19,153 ] so that has been until December.
Okay. And your full year guidance is still INR 30,000 or it could be lower than this now considering that 9 months has been like less than INR 20,000.
No, no, no, no. We have already now -- even this month also, it has overachieved it is around 100.2%. So we expect to achieve the targeted CapEx.
Okay. And it will be [ INR 30,000 ] going ahead also. So it won't...
Around [ INR 30,000 ] maybe a little more than [ INR 30,000 ].
If you -- Sabri, if you see in the last quarter, basically, there is always an increase in expenditure basically looking into the trend for [indiscernible] for many years, we expect to be within the targeted that is for [ INR 29.50 ].
[Operator Instructions] We have a question from Kirtan Mehta from BOB Capital Markets.
[indiscernible].
You are not audible.
You are not audible.
Is this better?
Yes, now it is better.
I wanted to check on the view of the sort of the implementation of the [indiscernible] Would you be able to share your discussions with government around what is your likely time line on the same.
See, Mr. Mehta, I think we are already engaged with the government. And as you -- I think you are aware about the [ REIT ] committee report also and the various -- that formula, which they have suggested to the government, so which we feel that, that is more practical and pragmatic is from our point of view also and for the consumer point of view also. So -- but we are still engaged with the government only, and it is under the consideration of the government. That is what we have learned. And nothing more we can say on that.
Is it likely in this financial year itself? Or is there a possibility of sort of getting spillover?
I think it should be within this financial year. That is our apprehension because the price which we are presently in, that is [ INR 8.57 ] applicable till 31 March 2023. So from first April, again, our call has to be taken. So before that, it should be, but then we are not much aware about that. It will not be proper to say anything further at this stage.
Sure. The second question was about [indiscernible] In terms of the CapEx, could you be able to sort of elaborate on the CapEx plan for OVL and the production targets for FY '24 for OVL?
Yes, OVL. I think, again, Mr. Vinod Hallan is there. So he will be able to give a suitable reply for this.
Yes, regarding the CapEx for FY '23, our budget is INR 2,907 crores and by December, we have used INR 1,970 crores. So next year, we are -- we have projected INR 3,339 crores. As regards to the production, oil plus -- OG, oil plus gas, for next year, it is [ 9.668 ] [indiscernible] equivalent gas. I repeat it is [ 9.668 ].
[ 9.668 ].
The next question comes from Mayank Maheshwari from Morgan Stanley.
Just two questions from my end. First was if you can just give us a bit of an idea around the oil marketing freedom that you had got from October last year. How has been the progress in terms of getting higher realizations on that? Anything around that, if you can share, that would be great.
Yes, yes.
That's all on my end.
The marketing freedom has been given to us and the various lots, which we have already actioned in the month of October. So there were some around 36 slots which were auctioned and we got an average premium of something around [ 1.79 ]. So that is all...
[ 7 9 over ].
Yes. [ Over blend, over blend ].
And when you said 36 lots, like can you just give it in [ 1 million tonne ] times or like how much percentage was sold in there? And what's your plan for FY '24 of how much do you think you can be able to sell in the open market, like these in FY '24?
I think as regards the sale quantity is concerned, so we don't have right now the data.
Yes, Mayank, actually this sale, we have initially started still, it will -- as far as filling the entire offshore crude that we would be selling and onshore crude, basically, we are supplying it through our pipelines in the existing process. So we would be in a position to sell the entire crude and -- offshore crude. And this figure, I can let you know separately. Basically, it's not handy with us as of now.
That's fine. I think I just wanted to understand like will your premium [ over Brent ] for fiscal '24 versus what you had seen in the last 8, 10 years, will that now be a premium? Or will the discount that you had kind of been getting for so many years? Will that continue even in FY '24? I just want your picture around it, if you can help us to [indiscernible] will be useful.
See, as of now, there is a premium [ risk ] we need to see how the market there, what are the market dynamics. So accordingly, it would be too early to say anything at this point of time.
Second question was more related to -- sorry, go ahead.
Yes, we hope to get a premium naturally. Considering our crude quality...
So that our marketing freedom, which has been given by the government, so it gives in [ 2 cents ] the value to us. Otherwise, we were selling earlier also. So we are expecting a premium.
Got it. And my second question was more related to OVL. If you can just give us any color around extension of the Vietnam license and lying around Colombia in terms of the production update there on Colombia?
Okay, Vinod.
Could you repeat the first question, please?
Vietnam license. Extension on Vietnam license.
The current [ PSC ] is valid until 18th of May '23. And as reserves, we still have life of another, say, 2.5 years, we are pursuing with the Vietnamese government to extend. And there is another area also in that block only [ acreage only ], where a discovery effort was made in the year 2019, for which also the extension has been applied for, and we are likely to receive the extension. That is the case of Vietnam to -- I mean to produce until the economic life of the existing field and also to carry out further exploration.
Second is regarding the Colombia. In Colombia, the current production levels are around 18,000 barrels of oil per day. And the -- in the next year, we are going to take up intensive drilling of around six wells which is right to take the production -- allows the production from the block.
Any targets around what you're targeting for production next year?
The next year, it should be around 30,000 BOP, 35,000 [indiscernible], we have exploratory campaign to drill six wells and hopefully, we'll be touching around 35,000 barrels of oil per day.
The next question comes from S. Ramesh from Nirmal Bang Equities.
In terms of your [ NBC ] consolidated P&L, there is the increase in the share of joint venture and associates. You can let us understand where this increase has come from, is it from [ ONGC Petro ] as other kind of profit on [ Petratis ] delivered in 3Q [indiscernible] should be great.
So in consolidation -- just hold on. If we have -- see our consolidated accounts, so what we see is that mainly in the 9 months case, our profitability has been affected by HPCL only. HPCL, because of, you can say, not increasing the retail price sorry, the RSP. So all the OMCs, they were under loss. So in this case, also, we are affected to the tune of something around INR 10,589 crores...
I was asking about the share of -- I understand the consolidated earnings segment you have given. I was asking about the share of JVs and associates in your P&L.
Yes. In case of P&L, it is -- we are into the profit of [indiscernible] crores. And another one, [indiscernible] in a loss because of this high LNG prices, so to the tune of INR 1,132 crores. And in regard to OTPC, we have a profit of INR 77 crores. Then IGGL, again, appropriate [ OTPL ], again, a small profit of INR 7 crores and the [indiscernible] at INR 13 crores. And this is before elimination, I would say.
So this OPaL loss of INR 1,132 crores is for 9 months or the third quarter?
9 months, 9 months.
So when do you see OPaL turning around...
And [indiscernible] to balance sheet is reaching [indiscernible]
Actually, next financial year, we are hoping that prices will come down and we will have some kind of opportunity in this regard. And major -- OPaL has already undergone a total major turnaround after operation of 4 years for overhauling of the major equipment. So that is why this time also, so one month it was where it was shut down for some time and in the first quarter. And then, of course, the increase in their [indiscernible] material cost also. But next year, we are hoping that it will come out and we will be able to come with the profits.
That is useful. So in the ONGC P&L, if you look at the depletion provision that has increased. So I cannot understand why that has happened?
Because I think a lot of Western offshore projects, so they have been capitalized Sagar Samrat also [ MOPU ] then other Western offshore, the redevelopment project. Water injection platform. I think Mr. Ramesh is there. He will be able to give you a good reply.
Yes. As far as the increase in depletion is concerned, as ma'am was saying, there are -- we have added a lot of facilities in the Western offshore, mainly. There, we have the pipeline replacement projects. The major pipeline projects are also read in addition to the platform. There is a platform by the name is -- in Mumbai, which we have added during this quarter and also the [ MOPU ] [indiscernible] has come. So all these have added to the -- our base of capital base, which has resulted in the increased depletion.
And if we move to OVL, there is an increase in daily share, but your core revenue has come down. So has the government take increased in any of your OVL property? And secondly, how has the share of JVs increase in OVL result? When you [indiscernible] you have, on the one hand, the revenue has dropped. So I want to understand whether government's take of profits or profit oil has increased? And secondly, what is the reason for the increase in JV share, but that's actually leading to the growth in profit share.
To reply to the second part, there is no change in the entitlement. So there is no increase in the government take in any of our projects. And on the first part, the revenue has come down mainly because of the [indiscernible] because after May '22, there are no revenues coming from the [indiscernible] project.
[indiscernible].
Pardon? Come again?
The share of JVs, the JV and equity accounting entity that has increased in this quarter in OVL. So where does that come from?
You're talking about quarter-to-quarter.
Compared to third quarter '22, third quarter '23, yes.
Yes, yes. So in the third quarter, that has increased because of the joint venture of [indiscernible] in Russia.
So what is the current thinking in the Mozambique [indiscernible] area energy project where Oil and [indiscernible] involved? When do you think that normal project contribution activity will resume? And are we stil working on [ 26% ] What is the current...
As per the current estimates, there is likely to be a soft resumption of activities in the month of April '23 and with this, there is a likelihood that in July '23, there will be a resumption of operations on the ground in case of Mozambique project. And what was [ 26% ] you asked?
So are you on track in terms of the first year coming out by FY 2023?
Yes. No, no, no. First gas is likely to be in the year '27.
'27.
But the CapEx cost remains unchanged. Is there any CapEx...
As of now, there are no -- there is no change in the CapEx, but that will be revised once the assumption of activities take this and the contractors are reengaged to look at the situation.
As [indiscernible] there is no increase.
If I may just ask one final question. What is the current status in the KG-98/2? And when do you see the volumes go up? And what is the final fully capitalized project cost here as of late?
So I think we have already answered. But again, our Chief Corporate Planning, so he will give you a suitable reply.
I think -- we are -- as we explained that we expect the first oil by May '23, and we will have a peak oil production of 45,000 barrels per day during this year. And because it will be coming from May or June '23. So the average production will be around 38,500 barrels for this next financial year. And gas production after the commissioning of the CPP is likely to be commissioned by May '24. And we will then have a likely peak gas production of around 11 million cubic meter for day.
Not the total capital cost?
Capital costs [indiscernible]. Sorry, I couldn't hear you. Hello?
[Technical Difficulty].
One moment, sir. Ladies and gentlemen, please stay connected while we connect the management team back on the call. Welcome back, sir. Please go ahead.
Hello?
Hello, yes.
Can we just confirm where we left last?
I was asking the capital cost. I'm sorry, I'm asking this question again. I joined the call later because of another call. I was asking about the capital cost.
Against the approved project cost of around INR 34,000 crores or $5 billion, the actual expenditure until January 2023 has been INR 21,500 crores.
Okay. So this [ 11 million ] is it quarter 3? Is pre-production...
Pre-production around 11 million cubic meters per day, we expect in the financial year '24, '25.
[ Earlier, the number was do understand that, ] [indiscernible] [ as that production be revised down? ] Or is there some -- at some point in time, will you see this number be raised [ 15 million cubic meters per day ].
I think it was -- I mean 12 million cubic meter per day, we were earlier anticipating the peak production. The three wells which we are producing already, we are producing around [ 1.6% ] against the projection of [ 3 million. ] So that 12 million cubic meter per day peak production has been now revised to around 11 million cubic meter. And the rest was all these wells of [ foton production ], then we will be again reviewing the whole thing.
The next question comes from Hemang Khanna from Nomura.
I hope I'm audible.
You're audible. Go ahead, sir.
I just wanted to get a sense on the overall [indiscernible] expenses that we saw in this quarter, there was a pretty sharp uptick. And given the fact that we have a significant expansion plan over the next few years. Could you help us understand if this would be a more sustainable kind of run rate for us to build it?
Just, Hemang, one second.
Hello?
Just Hemang, one second.
Mr. Hemang, the thing is that -- our -- there was certain area, which was under the no-go area, around 3 lakh square kilometers. So that has been given out by the government. Now government has given to us and we will be bidding it under the OLP. And then we will be going ahead with the exploration, which will include the 2 -- 3D also survey expenditure also and that will definitely increase. But we expect that around -- in the next 3 years, we will be spending around INR 32,000 crores in exploration. So if we take into account this now since we have to carry out the aggressive exploration in this now the area which has been given, which was categorized earlier as a no-go area. So definitely, so there will be increase in the survey expenditure also.
The next question comes from [ Amit Singhi], an Individual Investor.
I want to know what is the amount of revenue from natural gas in quarter 3 stand-alone, all the natural gas prices are covered under APM mechanism. And if the APM prices reduced to $6.5 how -- or reduction in natural gas prices, how it will impact ONGC?
Yes. Our -- we have got a very robust revenue of -- in this quarter, you are asking? INR 11,174 crores . So that is in Q3 of gas. We are talking only of gas. And yes -- and the Q3, the price has been from first October, the prices were a wise to $8.57 per million BTU. And let's see, let's hope that we get good prices now from first April also. And definitely, if there is some reduction in price or it will affect our revenues. But approximately, you can say INR 3,000 crores or so for $1 per million BTU reductions or increase. That is per annum.
That will be the last question for the day. Now I hand over the floor to Mrs. Pomila Jaspal, Director of Finance for closing comments. Over to you, madam.
Thank you all, all the investors. So you have been very -- you can say, the very satisfactory. I hope our replies have satisfied your question. And if at all, you have some additional questions, so you can let us know through a mail to our investors cell also for that [ IFC ] cell. So they will be able to give you the written answers on that. And with this, I am thankful to all of you for holding -- coming on this investor call and let's wish best for the future for ONGC. Thank you.
Thank you, Madam. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using [ Dusaba's ] conference call service. You may disconnect your lines now. Thank you, and have a good day, everyone.