ONGC plans a capital expenditure of Rs 1 lakh crore for petrochemical projects by 2028-2030.
The state-owned Oil and Natural Gas Corporation (ONGC) will start the production of crude oil from its flagship deep-water project in Krishna Godavari Basin next week.
The production will help India save nearly Rs 11,000 crore per year. India imports 85 per cent of its crude oil requirements and about half of its natural gas needs.
ONGC also plans a capital expenditure of Rs 1 lakh crore for petrochemical projects by 2028-2030. The investment will be used for two separate projects.
The movement in KG Basin is considered very significant, say top officials of the Ministry of Petroleum and Natural Gas (MPNG). The production from its much-publicised deep sea asset is expected to be a shot in the arm for the explorer and help reverse the low productions bothering the state-owned hydrocarbon behemoth.
The increase in domestic output will also help save outflow of precious foreign exchange on import of crude oil. At current Brent crude price of $77.4, this output alone will save Rs 29 crore every day (at Rs 83.29 to $1) or a staggering Rs10,600 crore on an annual basis.
Initially, oil production from the basin was scheduled to start from November 2021, but the deadline was delayed several times.
In short, this will be ONGC's first significant oil producing asset on the East Coast.
The KG-DWN-98/2 block has a number of discoveries that have been clubbed into clusters. It is situated 35 km off the coast of Andhra Pradesh in the Bay of Bengal with water depths up to 3,200 metres. The discoveries in the block are divided into three clusters - Cluster-1, 2 and 3. Cluster 2 is being put to production first.
Besides crude oil output, 7-8 mmscmd (million metric standard cubic metres per day) of gas will start to flow from the middle of calendar 2024.
The hydrocarbon giant, it is reliably learnt, will press into service as many as 75 rigs. ONGC plans to start producing from three to four wells in the initial phase, when the production could be 8,000 to 9,000 barrels per day. The company actually aims to drill 541 oil wells in FY24, up from 461 wells drilled in the last fiscal.
The production from the KG-DWN-98/2 block will add to India's domestic production and help reduce the dependence on imports to some extent. India currently produces approximately 600,000 barrels of oil per day. Thus, at peak, the cluster-2 project will account for 7% of India's output.
"This is the start. Peak oil production of 45,000 barrels per day is expected sometime in FY 24-25. At the peak output of 45,000 barrels per day, this will be the third most prolific offshore asset for ONGC after Mumbai High and Bassein & Satellite fields, both on the West Coast," said a top ministry official.
With a combination of fresh output and enhanced recoveries, ONGC group's oil production is likely to rise to top 25 million tonnes in FY25 compared to 21.5 million tonnes in FY23.
ONGC has seen a fall in its crude oil output as most of the assets are mature and a natural decline has set in. Even as ONGC is investing in technology for enhanced oil recovery and improved oil recovery, the commencement of output from new assets like the KG block will certainly reverse the trend of falling output.
In Q2, ONGC's consolidated net profit soared 142.4 percent at Rs 16,553 crore.
Earlier, ONGC had announced that it will bring in an equity partner in ONGC Petro additions Limited (OPaL) by financial year 2026-2027. ONGC had then said it wants to infuse Rs 18,365 crore in OPaL, and make OPaL a joint venture.
OPaL is a joint venture between ONGC, GAIL (India) and Gujarat State Petroleum Corporation Limited (GSPC).