ONGC to augment production in 6-8 fields to derive marketing, pricing benefits

State-run ONGC will ramp up production in at least six to eight gas fields to secure the marketing and pricing freedom announced by the Union cabinet on Thursday. ONGC is likely to contribute significant portion of the 40 mscmd of gas that is projected to be added to the country’s capacity of 80 mscmd.

ONGC currently produces 70 mscmd ( million standard cubic meters per day) of gas from its operational gas fields, which is almost 90% of India’s total production of natural gas.

On immediate basis the company expects KG basin field KG DWN98/2, which has produced first gas on March 5 to touch the production of 3 mscmd by March 21 and peak of 15 mscmd by FY23 to derive benefit of marketing and pricing freedom where affiliates can now participate in bidding rounds to buy own company gas.

Shashi Shanker, chairman and managing director of ONGC told FE in a post AGM conference call that some of the projects where ramp up will take place are: Daman Offshore project in the Tapti Basin; GK-28/42 in the Gulf of Kutch off the Gujarat Coast, GS-OSM 2004/1 in the Western offshore near Saurashtra, MB-OSN 2005/1 in Mumbai offshore in JV with GSPC, KG-OSN 2004/1 in the Krishna Godavari basin in Andhra Pradesh, and Custer 1 and Cluster 3 wells in KG DWN 98/2.

“We will do a detailed study of the projects and proceed depending on the price mechanism that will be decided. We are the largest contributor to India’s total gas production and will make significant contribution to the 40 mscmd that the oil minister said will get added to India’s total capacity after the pricing and marketing freedom,” Shanker said.

The company is hopeful of adding at least 2 wells to KG DWN98/2 gas field by February 2021 and expect 1.13 billion cubic meter (bcm) of gas per day, equivalent to 3 mscmd of gas by March 2021. This likely to reach the peak production of 6 mscmd of gas by FY23, Shanker said.

Considered to be the largest subsea project in India, block 98/2 is also expected to have a total peak oil production rate of 80,000 barrels per day.

The company will continue with its capital expenditure programme for essential projects and the rationalisation in capex of Rs 6,000 crore is mostly for desirable projects where supply chain disruptions have happened due to Covid-19 related issues, said Shanker. The oil major planned for Rs 32,000 crore capital expenditure in FY21, but rationalised it to Rs 26,000 crore due to Covid related disruptions in supply chain.