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ONGC to invest Rs 34,000 cr in K-G basin field

The government has extended pricing and marketing freedom to companies for difficult fields, chairman D K Sarraf said

A technician opens a pressure gas valve inside the Oil and Natural Gas Corp (ONGC) group gathering station on the outskirts of Ahmedabad

A technician opens a pressure gas valve inside the Oil and Natural Gas Corp (ONGC) group gathering station on the outskirts of Ahmedabad

BS Reporter New Delhi
Oil and Natural Gas Corporation (ONGC), the country’s largest petroleum explorer, on Monday announced a Rs 34,012 crore investment to bring into production the Krishna-Godavari basin oil and gas field by 2020.

“The investment will be made over four years to bring Cluster 2A and 2B into production. At its peak in 2023, the field will contribute 3.5 million tonnes (mt) of oil, around 15 per cent of the total oil production envisaged by then,” ONGC Chairman D K Sarraf said after a board meeting.

“Also, gas production at its peak will be five billion cubic metres, or 25 per cent of total output,” he added.

ONGC produced 18 mt of crude oil in 2014-15, less than a half of India’s total crude oil output of 38 mt. The company’s upcoming KG-DWN-98/2 block, popularly known as KG-D5, is divided into three vertical clusters. The top cluster, Cluster 1, is embroiled in a controversy with ONGC accusing migration of gas from the field to the adjoining fields of Reliance Industries.

“We have not taken any investment decision for Cluster 1 where we apprehend gas migration,” Sarraf said.

Monday’s decision covers the field development plan for two areas, 2A and 2B, in Cluster 2. The areas will produce 23.5 mt of oil and 50.7 billion cubic metres of gas over the life of the field.

Sarraf said the company was comfortably placed to fund the capital expenditure through internal resources. “But a decision will be taken at the appropriate time. It may involve tapping the market for loans,” he added.

The government had last month announced reforms to turn India’s hydrocarbon sector around. The decisions included allowing companies pricing freedom to make energy from difficult fields viable.

“We will be able to achieve the threshold rate of return for this project. We now expect the management committee to meet very soon to approve the field development plan,” Sarraf said.

The plan will need to be approved by the management committee, an oversight mechanism for oil and gas blocks auctioned under the New Exploration and Licensing Policy.

Cluster 2A has in-place reserves of 94.26 mt of crude oil and 21.7 billion cubic metres of gas while Cluster 2B has in-place reserves of 51.9 billion cubic metres of gas. Peak production from Cluster 2A is estimated at 77,305 barrel per day and 3.81 million standard cubic meters of gas per day through 15 producer wells. Peak production from Cluster 2B is estimated at 12.75 million standard cubic metres of gas per day from eight wells.

Cluster 2 covers 10 discoveries in all. ONGC is yet to notify declaration of commerciality for Cluster 3 with the directorate general of hydrocarbons. The project includes setting up a gas process platform, a floating production, storage and offloading unit for evacuation of oil and gas from the cluster apart from a network of 430 km sub-sea pipelines. The company plans to produce gas from the field by June 2019 and oil production will commence by March 2020.

THE PLAN
  • The decision covers the field development plan for 2 areas, 2A and 2B, in Cluster 2
     
  • The areas will produce 23.5 million tonnes of oil and 50.7 billion cubic metres of gas over the life of the field
     
  • Sarraf said the firm was comfortably placed to fund the capex through internal resources
     
  • The plan will need to be approved by the management committee
 

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First Published: Mar 29 2016 | 12:44 AM IST

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