India’s state-owned exploration company Oil and Natural Gas Corp. will by early 2019 quadruple the output from an offshore gas block in the Bay of Bengal that it spent $1 billion on in 2017, according to a senior ONGC official.
Output from the Deendayal natural gas block off India’s east coast will reach as high as 1 million standard cubic meters per day (MMscm/d) by January 2019, according to Rajesh Kakkar, head of ONGC’s offshore division.
ONGC bought the Deendayal Field in 2017 from state-owned company Gujarat State Petroleum Corp. (GSPC) while it was still undergoing test runs for commercial gas production. The increase in production is marginal against India’s total consumption, although Kakkar said the field has a potential to go up to 3 MMcm/d, which would make up about 4% of ONGC’s total output.
“The project will also help us in developing the adjoining gas fields in the KG (Krishna-Godavari) basin at lesser capex and time,” Kakkar said.
ONGC and Reliance Industries Ltd., along with partner BP Plc, are developing several natural gas discoveries in the KG basin. These discoveries could contribute up to 50 MMcm/d output, or about a third of India’s current demand.
ONGC, which meets up to 40% of India’s total natural gas demand, had been saddled with aging fields and dropping production for almost a decade. But the company registered a marginal jump in production in fiscal 2016-2017, and then production increased by another 6% in 2017 in the year through March 2018.
Analysts said the increase in output from the Deendayal Field will help ONGC in clocking an increased overall output in the current fiscal year as well.
The Deendayal gas field was discovered in 2005. The project was a flagship gas initiative of Indian Prime Minister Narendra Modi, who at the time was chief minister of Gujarat state on India's west coast.
Modi said then that the field held up to 560 billion cubic meters (20 trillion cubic feet) of natural gas, although delays and cost overruns in developing the field had some analysts questioning the quality of the investment for ONGC.
ONGC, however, will be able to monetize the gas at a higher price and with more marketing freedom under new rules meant to encourage the development of frontier offshore reserves.
Prime Minister Modi has set a target of increasing the share of natural gas in India’s energy mix to 15% by 2030, from 6.5% now. Modi also wants to cut down on energy imports, especially crude oil.
India consumed about 145 MMcm/d of natural gas, nearly 50% of it imported, in 2017-2018. The government has projected India’s potential demand at nearly 500 MMcm/d of gas.
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