ONGC Approves $5 bn KG Basin Investment Plan

Indian state-owned energy firm ONGC on Monday announced $5.07 billion investment in its KG basin oil and gas block. 

Board of Directors of ONGC approved the Field Development Plan (FDP) for the development of fields falling under Cluster 2 of the Deep-water NELP Block KG-DWN-98/2, ONGC said in a statement.

Cluster 2 of the block has been divided into two parts (i) Cluster 2A which has estimated In-place reserves of 94.26 MMt of crude oil and 21.75 BCM of associated; and (ii) Cluster 2B which has estimated In-place reserves of free gas of 51.98 BCM. Production is envisaged at a peak oil rate of 77,305 bopd and 3.81 MMSCMD of associated gas through 15 producer wells along with 12 water injection wells with a peak water injection rate of 9,400 m3/d from Cluster 2A oil fields. Peak production rate of free gas is envisaged at 12.75 MMSCMD from 8 wells of Cluster-2B free gas fields. Total oil and gas production envisaged is 23.526 MMt and 50.706 BCM respectively during the project life from the Cluster 2.

However, 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, Press Trust of India reported.

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 news agency added.

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.