Deep-water feat for ONGC

Jan 01 2014, 20:02 IST
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SummaryProduction starts at maiden deep-water block in Krishna-Godavari basin

ONGC has started production from its maiden deep-water block G-1 of the KG-DWN-98/2 block in the Krishna-Godavari basin off the Andhra Pradesh coast in November this year, hitting a new milestone in its 60-year old exploration history. The PSU plans to integrate this output with production from other other blocks, GS-15 and S2AB field in the S-1 block.

Production from G-1 will be integrated with two other blocks to touch a production of as high as 2.5 mmscmd (million metric standard cubic metres per day) by 2015, said a senior ONGC official.

Located 20 km off the Amalapuram coast in Andhra Pradesh, G1 and GS15 are two marginal blocks being developed together. Of the two, G1 is deep-water, 20 km away from the shore line while GS15 is shallow water. Gas was scheduled to start flowing from the integrated field way back in April 2006, at an estimated cost of R1,200 crore.

An official from upstream regulator Directorate General of Hydrocarbons (DGH) said that it has taken so long for the company to produce from deepwater blocks owing to the high costs and technical expertise involved. “ONGC has been exploring deepwater blocks right from the nomination era but did not find it viable to produce from these blocks. Also, Indian companies do not have the technical expertise to produce from deep-water,” he said.

The anomaly of rising oil and gas reserves and stagnating production over the last five years continues to haunt ONGC as new discoveries come on stream slower than the company would like and producing fields face depletion. The reserve replacement ratio (RRR) since 2005-06 has been greater than 1, indicating that the discovered resources more than replaces production in any particular year; and went as high as 1.84 in 2012-13. Yet the production numbers have hovered around the 51-53 metric tons of oil equivalent (mtoe) band.

ONGC director (offshore) PK Borthakur points that major discoveries are held up in deep-water blocks where the company holds limited production expertise. Apart from the inexperience in handling difficult exploration terrains, analysts say that weak project management practices have also contributed in delayed production. To address these issues the company has appointed BCG to enhance its project management practices.

A June 2013 report by Barclays Equity Research notes that ONGC has missed production targets for the last five years due to endemic project delays with its 40 large projects costing $14 billion running 22 months

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