India markets closed

Expansion mode: ONGC readies investment plan for Kutch offshore

Saurabh Kumar

India by 2021 will witness hydrocarbon production from its eighth sedimentary basin, Kutch offshore, as national explorer ONGC has prepared an investment plan that will be submitted soon to the Directorate General of Hydrocarbons (DGH). Kutch offshore is estimated to hold about 1 trillion cubic feet of gas reserves.

While work to put the basin on the oil and gas production map of India has been going on for two-three years, the recent changes in the policy framework has buoyed the state-run firm, according to a company executive.

Apart from the Assam Shelf, ONGC is credited with putting on production six of the seven producing basins of the country Assam-Arakan Fold Belt, Cambay, Cauvery, Krishna Godavari, Mumbai Offshore and Rajasthan. While India has a total of 26 sedimentary basins, Cauvery was the last one to begin production and was discovered in 1985.

The government recently made changes to its Hydrocarbon Exploration and Licensing Policy wherein for the existing contracts, marketing and pricing freedom to sell on arm s length basis through competitive bidding has been permitted for those new gas discoveries whose field development plan (FDP) will be approved for the first time since issuance of the new policy. We are coming to the FDP level, said the executive.

For nomination fields with the national oil companies, marketing and pricing freedom will be given if FDP for new gas discoveries is approved by the DGH. While the government has stipulated the price of gas from shallow fields at $3.69 per mmBtu, the executive said under the new policy ONGC will be able to realise $7-8 per mmBtu which is the price at which GSPC is selling gas in the region.

The company was earlier not comfortable with the fiscal regime as it believes that Kutch offshore will require heavy investment as it is not an easy area and the low price mandated by the government was challenging.
According to the official, the company has made discoveries in the mesozoic level (shallow) and it has also drilled through basalt rocks to reach deposits at depths of around 2,300-2,400 metres. This will also be the first time that ONGC will be producing hydrocarbons from sub-basaltic levels. The company has drilled through basalt rocks in the Kerala-Konkan region earlier without any success.

ONGC has also found gas in the Vindhyan basin and appraisal is likely to commence shortly.