ONGC set to invest $9.5 bn to up output

Oil and Natural Gas Corporation (ONGC), the country’s biggest energy explorer, plans to invest around $9.5 billion to augment production. Of this, the government-owned company will invest around $4.5 billion in developing its fields in the Krishna-Godavari Basin off the country’s east coast, Director (Exploration) D K Pande said today.

“The exact cost will be known once the conceptualisation is complete but, as we have estimated, it will entail an investment of around $4.5 billion. This is apart from the ultra deepwater block, which will take some time,” Pande told reporters on the sidelines of the Petrotech 2010 event here. The development would include 10 gas discoveries in the KG-DWN-98/2 Block, adjacent to Reliance Industries Ltd’s prolific D6 Block, and another nine oil and gas discoveries from the neighbouring 1G nomination block.

Pande said the Krishna-Godavari development would yield a gas output of 25 million standard cubic metres a day of gas and around 10,000 barrels of oil. He added the development is expected to be completed in four-five years and production likely to begin in 2014-15. Pande said the company is talking to global oil majors like BP, Exxon Mobil, BG Group and Eni for developing these east coast discoveries. Besides these, ONGC also plans to invest another

$5 billion in developing the UD-1 deepwater discovery, which is being appraised. “We are currently drilling an appraisal well in the southern area of the block, which will be completed by the end of this month,” Pande said.

The UD-1 discovery holds in-place reserves of 82.3 billion cubic metres of gas. ONGC has 90 per cent interest in the block, while the remaining 10 per cent belongs to Cairn India. The company produced 26.46 million tonnes of crude oil and 25.59 billion cubic metres of gas in 2009-10. The company’s share price gained 0.76 per cent at Rs 1,328.10 by close of Tuesday’s trade on the Bombay Stock Exchange.