Aug. 4 (Bloomberg) -- Oil & Natural Gas Corp., India’s biggest energy explorer, plans to invest in nuclear plants in the country and has started mining for uranium to counter declining crude production.
The company is in talks with Nuclear Power Corp. of India, the state-owned monopoly, on a potential partnership, ONGC Chairman A.K. Hazarika said by telephone from New Delhi today.
“It’s very much a demand story and we would want to be helping meet most of India’s energy demand,” Hazarika said. “We are looking to get into related businesses for our next phase of growth.”
ONGC’s domestic production of crude oil and natural gas has declined as fields that are more than three decades old run out of reserves. Asia’s third-biggest economy reaffirmed plans to boost nuclear power generation about 13-fold by 2030 to bridge an energy shortfall after conducting a safety review that was triggered by Japan’s Fukushima disaster.
“Given India’s power demand and ONGC’s own declining oil production, nuclear is an opportunity,” said Alok Deshpande, a Mumbai-based analyst at Elara Securities Ltd., which has an “accumulate” rating on ONGC shares. “Rewards may only start coming in the long term because the process of setting up nuclear plants is long and very highly regulated.”
ONGC may buy stakes in Nuclear Power’s projects and hasn’t decided if it will invest in existing stations or planned ones, Hazarika said.
ONGC fell 0.4 percent to 276 rupees at 12:51 p.m. in Mumbai trading. The stock has dropped 14 percent this year compared with a 13 percent decline in the benchmark Sensitive Index.
Indian Oil Corp., the nation’s biggest crude oil refiner, will invest 9.61 billion rupees ($216 million) in a plant being built with Nuclear Power, former oil minister Murli Deora said Nov. 18. National Aluminium Co. will form a venture with Nuclear Power to set up a 1,400 megawatt station in Gujarat state, Chairman B.L. Bagra said May 2.
ONGC hasn’t ascertained the size of its planned investment, Hazarika said, declining to say when a decision would be taken. The company had about 190 billion rupees of cash as of June 30, he said.
“Money will not be a problem,” the chairman said. “The important thing is to be able to grow. We are generally looking to get into all kinds of clean energy businesses.”
The state-run company has started mining for uranium in the Cauvery area in the south Indian state of Tamil Nadu in partnership with Uranium Corp. of India and plans to explore in Andhra Pradesh state, he said.
ONGC approved a plan to build a 102 megawatt wind farm in Rajasthan state, the company said in July last year. The government may ask the company to work on the nation’s first offshore wind project, Renewable Energy Ministry Secretary Deepak Gupta said Feb. 17.
Prime Minister Manmohan Singh reviewed safety measures at the nation’s atomic projects before deciding India wouldn’t waver from its planned nuclear expansion. Countries from Germany to China to Japan said they would review or scale back their programs after the March 11 earthquake and tsunami triggered radiation leaks at Tokyo Electric Power Co.’s Fukushima station, the worst nuclear accident since Chernobyl in the former Soviet Union in 1986.
Nuclear Power currently has 20 reactors that can generate 4,780 megawatts, or 2.7 percent of India’s total installed capacity of 176,990 megawatts as of June 30. The country plans to increase its nuclear capacity to 60 gigawatts by 2030, according to the Planning Commission.
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