Much-delayed ONGC’s $5bn K-G project operational now

Hyderabad: State-owned Oil and Natural Gas Corporation (ONGC) on Monday said it has started oil production from its much-delayed flagship deep-sea project in Krishna-Godavari (K-G) basin in Bay of Bengal, which will help reverse years of decline in output.

The ‘first oil’ from the deep-water KG-DWN-98/2 block in Bay of Bengal flowed on January 7, the firm said in a statement. Oil Minister Hardeep Singh Puri also announced the start of production in a post on X, but neither he nor ONGC gave out the amount of oil being produced.

“This 98/2 project is likely to increase ONGC’s total oil and gas production by 11 per cent and 15 per cent respectively,” ONGC said in the statement. ONGC had proposed a field development plan (FDP) for Cluster-2 in April 2018, with an estimated capital expenditure of $5.07 billion and operational expenditure of $5.12 billion over a field life of 16 years. The Cluster-2 field is divided into two blocks namely 2A and 2B, which as per the original investment decision were expected to produce 23.52 million metric tonnes(MMT) of oil and 50.70 billion cubic metres (bcm) of gas over the life of the field. Cluster 2A was estimated to contain reserves of 94.26 million tonnes of crude oil and 21.75 bcm of associated gas, while Cluster 2B is estimated to host 51.98 bcm of gas reserves. Cluster 2A was anticipated to produce 77,305 barrels of oil per day (bopd) and associated gas at a rate of 3.81 million metric standard cubic metres per day (mmscmd) over 15 years. Cluster 2B was expected to produce free gas of 12.75 mmscmd from eight wells and has a 16-year life. But ONGC is now projecting a lower output - 45,000 bpd of oil and up to2.5 mmscmd from Cluster 2A and around 9 mmscmd from Cluster 2B.

ONGC produced 18.4 million tonnes of crude oil and about 20 billion cubic metres per day of gas in the 2022-23 fiscal year (April 2022 to March 2023). Puri said the “production is expected to be 45,000 barrels per day and over 10 million standard cubic metres per day of gas” from the Cluster-2 discoveries in the block.

He however did not give the timelines for reaching those levels of output. Last month in a written reply to a question in Rajya Sabha, Minister of State for Petroleum and Natural Gas RameswarTeli had stated that ONGC will in May 2024 start commercial production of crude oil from the block. The KG-DWN-98/2 or KG-D5 block, which sits next to Reliance Industries’ KG-D6 block in the KG basin, has a number of discoveries that have been clubbed into clusters.