July 29, 2013
New Delhi: Indian multinational oil and gas company, Oil & Natural Gas Corp (ONGC) has signed an agreement to explore hiring Reliance Industries unutilised production facilities on the east to quickly bring to production its gas finds in the Krishna Godavari basin. ONGC has made nine gas finds in its KG block KG-DWN-98/2, which sits next to RIL's flagging KG-DWN-98/3 or KG-D6 block. The state-owned firm plans to club these with discoveries in another neighbouring block to begin production from 2016-17. But instead of putting separate gas processing and transportation facilities, ONGC is looking to hire RIL's under-utilised gas gathering station at KG-D6 fields along with pipelines that take the fuel to onland as also it’s processing plant at Kakinada in Andhra Pradesh. ONGC "inked a Memorandum of Understanding with RIL to explore the possibility of sharing the latter's infrastructural facility in the East Coast," the two firms said in separate but identical statements.
RIL has pipeline and other facilities capable of handling gas output of 80 million standard cubic meters per day. KG-D6 output has dipped to 14 mmscmd from 69 mmscmd achieved in March 2010 and the company indicated it may never touch 80 mmsmcd due to unexpected geological complexities. A team of ONGC officers has been constituted to carry out technical feasibility for development of some of the company's fields so as to reduce cost of development and early monetisation. "The MoU aims at working out the modalities for sharing of infrastructure, identifying additional requirements as well as firming up the commercial terms," the statements said. ONGC aims to cut capital expenditure as also expedite field development by using RIL's infrastructure. The infrastructure sharing would help in "early monetization of its deep water fields adjacent to the fields of RIL".
ONGC plans to produce about 6 to 9 mmscmd of gas by mid-2017 from G-4, KG-DWN - D & E fields in the first phase. "The companies intend to enter into a formal agreement after conducting a joint study which will be spread over the next nine months," the statements said. ONGC has found 4.85 trillion cubic feet of gas reserves in nine gas discoveries it has made in the Krishna-Godavari basin block KG-DWN-98/2. The block is targeted for production by 2016-17 and a peak production of 22 mmscmd is envisaged. Gas from these is proposed to be produced by combining them with a gas discovery in the adjacent block. G-4 gas discovery in a neighbouring block is planned to be developed along with finds in the Northern Discovery Area of KG-DWN-98/2. ONGC Chairman Sudhir Vasudeva said: "It is a win-win situation not only for both the companies which are striving hard to accrete new reserves and put them on production at the quickest time but also for energy starved nation."