Oil and Natural Gas Corporation (ONGC) has started crude oil production from its massive deep-sea project in the Krishna-Godavari (KG) basin block KG-DWN-98/2, which was hit by multiple delays and deadline extensions over the past few years. The project is expected to help the state-owned oil and gas behemoth to arrest the decline in its overall oil production from its mature fields.
“ONGC announces the successful commencement of ‘First Oil’ from the deep-water KG-DWN-98/2 Block, situated off the coast of Bay of Bengal. This 98/2 project is likely to increase ONGC’s total Oil and Gas production by 11 per cent and 15 per cent respectively,” the public sector oil company said in a statement.
In a post on X (formerly Twitter), Prime Minister Narendra Modi said, “This is a remarkable step in India’s energy journey and boosts our mission for an Aatmanirbhar Bharat. It will have several benefits for our economy as well”. Petroleum Minister Hardeep Singh Puri said that the project is expected to add This project is expected to add 7 per cent each to India’s current production of oil and natural gas.
This is a remarkable step in India’s energy journey and boosts our mission for an Aatmanirbhar Bharat. It will have several benefits for our economy as well. https://t.co/yaW7xozVQx
— Narendra Modi (@narendramodi) January 8, 2024
Large projects like KG-DWN-98/2 are critical to the country’s objective of reducing its reliance on oil and gas imports to meet its rapidly growing energy needs. India is the world’s third-largest consumer of crude oil and depends on imports to meet over 85 per cent of its requirement. The country is also a major importer of natural gas, as domestic gas output is able to meet around 50 per cent of the demand.
The KG-DWN-98/2 project saw delays on account of multiple factors, which included subsurface geological issues, challenging weather and geological conditions, changes in well locations and surface facilities, and global supply chain issues due to the COVID-19 pandemic.
ONGC had initially planned to start oil production from the block in November 2021, but the deadline saw multiple extensions. The project’s first phase, which involved commencement of natural gas production, was executed nearly four years ago in March 2020. At the time of the project launch in April 2018, ONGC had estimated its capital expenditure at $5.07 billion and operational expenditure at $5.12 billion over a field life of 16 years.
“With commencement of this First Oil on 7 January 2024, ONGC is nearing completion of Phase 2, culminating into commencement of oil production from the ‘M’ field of KG-DWN-98/2… The flagship project is on track with final phase of project with the balance oil & gas fields of the block scheduled to be put on production by mid 2024. Peak production of field is expected to be 45,000 barrels of oil per day (bopd) and over 10 mmscmd (million metric standard cubic metres per day) of gas,” ONGC said.
This plan does not include the ultra-deep-water gas discovery, which will be the world’s second-deepest hydrocarbon discovery when monetised. Production from that discovery is still a few years away.
The offshore KG-DWN-98/2 block is located next to the prolific KG-D6 block of Reliance Industries in the Bay of Bengal. It is located around 35 km from the coast of Andhra Pradesh in water depths of 300-3,200 metres. For the project, ONGC employed a cluster development approach, bunching up the discoveries in three clusters. The second cluster is being put into production first.