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State-run Oil and Natural Gas Corporation and its partner, Cairn India, are readying to spend between $750 million and $1 billion (Rs 4,800-6,400 crore) in the Nagayalanka onshore block in the Krishna-Godavari Basin.
Officials from ONGC and Cairn India said the finds were promising and they were set to commence production next year. The investments would be over three to five years, on creation of infrastructure, production facilities and transportation.
“We are very positive on the block. In addition to oil, there are small amounts of gas with recoverable reserves of around 70 billion cubic ft,” said an ONGC official.
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From the Declaration of Commerciality documents, Nagayalanka has oil resources of about 320 million barrels, of which about 40 million can be recovered.
ONGC has prepared a Field Development Plan and drilled two gas producing wells at the block. It plans to produce 50,000 cubic metres of gas a day by the first quarter of 2016-17.
It has begun getting enquiries from customers in the region for use of the gas. The price, it said, would be decided by the Union petroleum ministry.
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ONGC took over the block operations in July 2014 from Cairn India. It has said it plans to begin installing gas production and handling facilities at the block by the second quarter of this financial year. By 2018-19, ONGC and Cairn India plan to produce 200,000 cubic metres a day.
