Hindustan Oil Exploration Company to start production in Mumbai from June

Chennai-based Hindustan Oil Exploration Company (HOEC) has said it expects to start production from its discovered small field (DSF-I) block B-80 in Mumbai Offshore by June 2020.

Though the first round of DSF bidding happened in 2016, none of the 31 contract areas have started production so far. The firms is already in talks with state-run Oil and Natural Gas Corporation (ONGC) for sharing its pipeline infrastructure for evacuation of oil and gas from the block. 

According to the plan, gas will be transported to ONGC’s Hazira plant and oil to ONGC’s Uran plant through ONGC’s pipelines. “We are in talks with ONGC regarding this. We will start drilling of the first two blocks by December 2019 and expect to begin production by June 2020,” said P Elango, managing director of HOEC. 

HOEC and Adbhoot Estates hold 50 per cent participating interest each in the block. The companies have lined up investment to the tune of $60 million in the block — including $15 million for a Mobile Off-shore Processing Unit (MOPU).

Elango said his firm has already tied up with UK-based EXPRO for designing, installing, operating and maintaining the oil and gas process plant in the MOPU. On the other hand, GE Baker Hughes will provide well drilling and completion services. Elango said HOEC has shortlisted contractors for supply and installation of subsea production control equipment and flow lines. 

Elango said gross production now stands at close to 10,000 barrels of oil per day (boepd), and with the addition of the DSF block, this will increase to around 15,000 boepd by the next financial year. Of the total 31 contract areas under the first round of DSF, 23 were in onland area and eight in offshore. 

The round had seen participation of PSUs such as Prize Petroleum, Indian Oil, Bharat PetroResources, and Oil India. Private sector majors include OilMax Energy, AdaniWelspun Exploration, Megha Engineering and Infrastructures, as well as Sun Petrochemicals. 

However, none of the players were successful in starting production so far, as a number of onland blocks got stuck in environmental, forestry, as well as wildlife clearances. 

The government started offering discovered small fields for development, in order to attract small players and start-ups and also reduce India’s energy import dependency by 10 per cent by 2022. Based on initial government estimates, gross revenue from the round was expected to be Rs 46,400 crore, of which the government’s share in the form of royalty and revenue may come to around Rs 14,000 crore. 

In the second round of DSF that concluded in February this year, at least 23 contract areas were awarded to eight companies – including ONGC, OIL, HOEC and IOC.