ONGC to invest 34k cr in KG Basin
State-owned ONGC on Monday announced $5.07 billion (Rs 34,000 crore) investment in its KG basin oil and gas block but the delay on government\'s part in approving a higher gas price for difficult areas would mean the output would be delayed by one year to 2019-20.
Oil major's Board approves the investment which will see gas production from 2019
New Delhi : State-owned ONGC on Monday announced $5.07 billion (Rs 34,000 crore) investment in its KG basin oil and gas block but the delay on government's part in approving a higher gas price for difficult areas would mean the output would be delayed by one year to 2019-20.
The board of Oil and Natural Gas Corp approved $5,076.37 million investment in bringing to production 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.
"First gas production is envisaged by June 2019 and oil would start flowing from March 2020," ONGC chairman and managing director DK Sarraf said after the board meeting.
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. 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 deepsea 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 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. "AP Shah panel is looking into the issue and we would proceed on it once the dispute is adjudicated," he said.
Sarraf said from Cluster-II a peak oil output of 77,305 barrels per day is envisaged within two years of start of production. Gas output is slated to peak to 16.56 million standard cubic meters per day by end-2021.