ONGC Seeks Peak Oil And Natural Gas Output From KG Block In FY24

Oil and Natural Gas Corporation's (ONGC's) delayed Krishna Godavari basin KG-D5 project is likely to hit peak oil and natural gas output in 2023-24 and will help the firm to reverse the downward slide in its overall production, a senior official said on Monday.

ONGC was originally to start gas production from the Cluster-II fields in block KG-DWN-98/2 (KG-D5) in June 2019 and the first oil was to flow in March 2020. But these targets were quietly shifted to end-2021 due to contracting issues and supply chains being hit by the pandemic.

The project was further pushed back and crude oil is now expected to reach Indian shores in the third quarter of 2022 -- against the revised target of November 2021 -- and natural gas in May 2023, against the revised target of May 2021.

Anurag Sharma, director (onshore) and interim director (finance) of ONGC, in an investor call, said the block is currently producing 0.6 million standard cubic metres per day and a third well coming on stream would add 1.75 mmscmd by next month.

"There have been some issues (with the project) which we are trying to resolve," he said, adding the journey towards peak output would start in the fiscal year beginning April 2022.

And in 2023-24 (April 2023 to March 2024), a peak output of 2.2 million tonnes or about 44,000 barrels per day of oil and 10.41 mmscmd of gas is likely to be achieved, he said.

At the time of its launch in April 2018, ONGC had said the estimated capital expenditure would be USD 5.07 billion and operational expenditure would be USD 5.12 billion over a field life of 16 years.

Sharma said the company hopes to arrest the decline in crude oil production in the next fiscal while natural gas output is likely to see a rise.

Crude oil production in the fiscal year 2022-23 is estimated at 20.98 million tonnes, almost the same as in the previous year. Natural gas output is seen at 24.28 billion cubic metres.

With KG-D5 going live, oil production is estimated to rise to 24 million tonnes in 2023-24 and gas would rise to 32.16 bcm, he said.

ONGC's 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. It is situated offshore the Godavari river delta in the Bay of Bengal. It is located 35-km off the coast of Andhra Pradesh in water depths ranging from 300-3,200 metres.

The discoveries in the block are divided into three clusters -- Cluster-1, 2 and 3. Cluster 2 is being put to production first.

Not just the delay but the production profile has also undergone a change since the investment decision was made.

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 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 is expected to produce free gas of 12.75 mmscmd from eight wells and has a 16-year life.

But now the output estimated is lower.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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