The board of directors of State-owned Oil and Natural Gas Corporation (ONGC) on Monday approved a $5.076 billion or Rs 34,012 crore field development plan in its Krishna Godavari (KG) basin oil and gas block on the east coast of India.
The total production is estimated to be about 23.526 million tonnes of crude oil as well as 50.706 billion cubic meters of natural gas. The first production of natural gas is expected in June 2019 and crude oil production in March 2020.
The investment announcement comes less than three weeks after the Government gave pricing and marketing freedom to gas produced from such basins and the pricing freedom will have a cap determined by the lowest of either imported fuel oil, weighted average of landed price of coal, fuel oil and naptha or the imported lNG's landed price.
“The first production of natural gas is expected in June 2019 and crude oil production is expected to begin in March 2020. The peak rate of production will be 77,305 barrels of oil per day and 16.56 million standard cubic metres of natural gas per day,” said ONGC Chairman and Managing Director DK Sarraf.
The ONGC’s board said the mega investment plan would bring in the production of 10 oil and gas discoveries in the Bay of Bengal block KG-DWN-98/2 (KG-D5), which sits next to Reliance Industries flagging KG-D6 fields.
In fact, ONGC had in 2014 announced plans to start gas production from 2018 and oil by 2019 but a final investment decision was made contingent upon Government approving a remunerative price for the deepsea block as the current rate of $3.8 per million British thermal unit was uneconomical. The Government earlier this month announced a new pricing formula for difficult areas that would at current prices give developers just over $7 per mmBtu price.
However, Sarraf said the field development is economical at the price announced and the board at its meeting today approved the investment plan for Cluster-II group of discoveries in KG-D5. The 7,294.6 sq km deep-sea KG-D5 block has been broadly categorised into Northern Discovery Area (NDA - 3,800.6 sq km) and Southern Discovery Area (SDA - 3,494 sq km).
The NDA Government has 11 oil and gas discoveries while SDA has the nation’s only ultra-deepsea gas find of UD-1. These finds have been clubbed in three groups - Cluster-1, Cluster-II and Cluster-III.
“Gas discovery in Cluster-I is to be tied up with finds in neighbouring G-4 block for production but this is not being taken up currently because of a dispute with RIl over migration of gas from ONGC blocks,” Sarraf said.