State-owned Oil and Natural Gas Corporation (ONGC) will be outsourcing gas production activities at some of its marginally-filled and isolated wells in the Krishna-Godavari Basin to other companies on a production sharing basis, sources close to the development said today.
It is not economically viable for the company to produce gas in those wells where the output pressure has fallen below required limits, according to sources.
“Hence, we have decided to outsource 40 of such wells in the KG Basin, where the pressure gas has gone below 700 PSI, which is essential to connect to GAIL pipeline. We may get 40-60 per cent of the gas produced by the private operators, depending upon the well,” sources told PTI.
According to industry analysts, there can be a further production of 10,000 to 20,000 cubic metres of gas from these wells for a period of 2-5 years.
ONGC earlier had said it will not be economically viable to produce gas from its Krishna-Godavari Basin block at the current sale price of $4.20 per mmbtu and 60 per cent of the international price for oil.
However, the government had argued that the current blocks were allotted on nomination basis and the price is justifiable.
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When contacted, an ONGC spokesperson said previous investments made by ONGC in these idle assets (marginal fields) has been recovered and it plans to outsource fields in the Western Offshore Basin also.
The approximate turnover of the KG Onshore asset to ONGC is Rs 1,000 crore, involving production of around 950-980 tonnes per day of oil and 38 million standard cubic metres of gas per day, with value added products generation of 67,000 tonnes annually.