In a significant development in the indigenous production of petroleum, the public sector company Oil and Natural Gas Corporation (ONGC) is expected to start crude oil production at its ONGC’s deep-water project in the Krishna Godavari (KG) Basin. The production at the site is scheduled to start next week, reported NDTV.
India which imports around half of its natural gas demand and 85% of its crude oil requirements is reported to save around Rs 11,000 crore annually owing to the output. Furthermore, ONGC intends to invest Rs 1 lakh crore in capital projects related to petrochemicals by 2028–2030 in two distinct ventures.
Senior officials of the Ministry of Petroleum and Natural Gas (MPNG) view the movement in the KG Basin as quite significant. The production from its highly publicised deep sea asset is anticipated to give the explorer a boost and assist in reversing the poor productions that are causing concern for the state-owned petroleum giant.
The rise in domestic production would lessen the amount of valuable foreign cash that is lost when importing crude oil. This output alone would save Rs 29 crore every day (at Rs 83.29 to $1) or an astounding Rs 10,600 crore per year at the current price of Brent crude, which is $77.4. The original proposal planned for the basin’s oil production to begin in November 2021, however, there were multiple delays in this timeline. This is going to be ONGC’s first substantial East Coast oil-producing asset.
Many of the conclusions that were made in the KG-DWN-98/2 block have been grouped together. It is located in the Bay of Bengal, 35 kilometres off the coast of Andhra Pradesh where the sea is up to 3,200 meters deep. The block’s revelations have been organised into three groups, Clusters 1 through 3 and production commences with Cluster 2.
Gas production estimated to be between 7 and 8 million metric standard cubic meters per day would begin in mid-2024 in addition to crude oil extraction. According to trustworthy sources, the gigantic oil company plans to put up to 75 rigs into service. The first stage of production which might yield 8,000–9,000 barrels per day is planned by ONGC to begin from three to four wells. The corporation has increased the number of oil wells it plans to drill from 461 in the previous fiscal year to 541 in FY24.
India’s internal production would increase due to the KG-DWN-98/2 block’s output, partially reducing the country’s reliance on imports. At the moment, India produces about 600,000 barrels of oil each day and the cluster-2 project would provide 7% of India’s output at its peak.
Senior MPNG official informed, “This is the start. Peak oil production of 45,000 barrels per day is expected sometime in FY 24-25. At the peak output of 45,000 barrels per day, this will be the third most prolific offshore asset for ONGC after Mumbai High and Bassein & Satellite fields, both on the West Coast.”
The oil production of the ONGC group is reported to surpass 25 million tonnes in FY25 up from 21.5 million tonnes in FY23 due to a mix of increased recoveries and new output. With most of its assets becoming older and a natural decline setting in, ONGC has experienced a decrease in its output of crude oil. The start of flow from new assets like the KG block is bound to buck the trend of declining output even as the firm continues to put money into technologies for better and increased oil recovery.
ONGC had declared that by the 2026–2027 fiscal year, it would introduce an equity partner to ONGC Petro additions Limited (OPaL). ONGC then declared that it wanted to establish OPaL as a joint venture and invest Rs 18,365 crore in it. ONGC, GAIL (India) and Gujarat State Petroleum Corporation Limited (GSPC) have partnered to form OPaL.
