S&P Affirms ONGC’s ‘BBB’ Rating, Raises Likelihood of Government Support to Extremely High; Outlook Stable

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S&P Global Ratings has reaffirmed Oil and Natural Gas Corporation’s (ONGC) long-term credit rating at ‘BBB’ with a stable outlook. Importantly, the agency raised the likelihood of government support to extremely high, reflecting ONGC’s critical role in India’s energy security and strong sovereign backing.

S&P Global Ratings has affirmed the credit rating of ONGC, India’s largest state-owned oil and gas producer, at ‘BBB’ with a stable outlook. This development signals confidence in ONGC’s financial health and operating stability amid a dynamic energy market.

The highlight of S&P’s rating action is the elevation of the likelihood of government support to “extremely high,” reflecting ONGC’s strategic importance to India’s energy infrastructure and its majority ownership by the Government of India. The sovereign linkage underpins ONGC’s credit profile and reduces perceived risk for investors.

The stable outlook underscores expectations that ONGC will maintain its credit metrics over the near term, benefiting from steady domestic production, recovery in cash flows, and government backing. S&P affirmed ONGC’s standalone credit profile of ‘bbb+’, indicating solid financial strength even without sovereign support.

Key drivers include ONGC’s role as the dominant upstream oil and gas producer in India, with a production share exceeding 60%, and its extensive upstream, refining, and marketing operations. Though facing industry challenges such as declining mature fields and sector-wide transition risks, ONGC’s diversified portfolio and investments in deep-water and domestic gas production indicate growth potential.

S&P’s affirmation aligns with India’s sovereign credit rating upgrade to ‘BBB’, reflecting broader confidence in India's economic fundamentals and fiscal discipline.

Important Points:

ONGC’s long-term rating affirmed at ‘BBB’ by S&P with stable outlook.
Likelihood of government support raised to “extremely high,” reinforcing sovereign linkage.
Standalone credit profile remains strong at ‘bbb+’ despite sectoral challenges.
ONGC accounts for over 60% of domestic oil and gas production in India.
Stable outlook reflects expected steady financial and operational performance.
Strategic significance in India’s energy security strengthens credit support.
Government ownership stands at 68%, ensuring policy and financial backing.

ONGC’s diversified operations, including deep-water projects, support medium-term production growth.

Rating affirms ONGC’s resilience amid energy market volatility and India’s transition to renewables.

This rating affirmation cements ONGC’s position as a reliable government-backed pillar in India’s energy sector, reassuring investors of its credit stability and ongoing importance to the country’s energy security.

Sources: S&P Global Ratings release, Fitch Ratings affirmation, PIB India, Business Standard, AInvest analysis.

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