ONGC looks for partners to raise output from 43 fields

Source: Financial Express, 20 August 2021

To increase recovery from its 43 producing fields across Gujarat, Assam, Tamil Nadu and Andhra Pradesh, state-run oil and gas producer ONGC on Thursday invited offers seeking partners to enhance production from its marginal nomination fields.

These fields have total in-place oil and oil equivalent gas (O+OEG) volume of about 160 million tonne of oil equivalent.

“Eligible companies (Indian or foreign), either alone or in consortium with other companies, may bid for one or more contract areas,” a statement from the company said. The companies can send in their bids by December 3.

The 43 fields will be divided among 11 on-land contract areas and the partners will be selected on a revenue-sharing basis. “The revenue will be shared on incremental production over and above the baseline production under business-as-usual (BAU) scenario,” the company said.

ONGC will also allow the selected partners to sell hydrocarbons on an arm’s length basis through competitive bidding, and they will have complete marketing and pricing freedom. The contract period will be of 15 years with an option to extend by another five years.

The development comes amid the country’s effort to raise domestic oil and gas output and reduce import dependency. Domestic natural gas production had fallen 8.1% year-on-year to 28,670.6 million standard cubic metre in FY21. Indigenous natural gas production caters to about 51% of the country’s requirements, while around 85% of the country’s crude oil is imported. The 30.5 million tonne of crude oil produced in the country during the fiscal was also 5.2% lower than the production in the year-ago period.

Domestic natural gas production has started rising in the recent months, mainly due to higher production from Reliance Industries and BP’s ultra-deep-water field in the KG-D6 Block of the Krishna Godavari basin on the east coast. The current price for gas produced from local nominated fields has been revised to an all-time low of $1.79/ million British thermal units (mBtu) by the government, which is much below the breakeven point for most fields, deterring gas producers from aggressively increasing production or getting into new high-risk projects. For ultra-deep-water gas fields like the Krishna Godavari basin, which have higher pricing and marketing freedom, the current price cap is set at $3.62/mBtu.

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