At 14 mmscmd, ONGCs Daman to cut gas deficit

Written by Pranav Nambiar | New Delhi | Updated: Aug 20 2013, 10:18am hrs
ONGC is betting on its new offshore Daman fields, expected to come on stream in 2015, to boost the production of gas even as ageing fields take a toll on output. So much so that the public sector oil and gas major has fast-tracked the development of this west coast block by four years in order to reap the dividends earlier.

A senior ONGC official told FE that the shallow-

water Daman fields hold over 4 trillion cubic feet (tcf) of reserves and will have a peak production of 14 million standard cubic meter per day (mmscmd), expected by FY20.

This is comparable to RILs current output at D1 and D3 fields in the KG-D6 block of close to 14 mmscmd.

Located at a depth of less than 100 metres, the Daman offshore block is an integrated project between the B-12 and C-24 fields and some marginal C Series fields currently producing small quantities of gas.

The official said ONGC was awaiting board approval to set up a gas processing plant in Daman. We cannot use our other gas processing plants as there is little capacity left to process the Daman gas, he said. ONGC currently has two gas processing plants at Hazira in Gujarat and Uran near Mumbai. The Daman plant is expected to have a processing capacity of 10 mmscmd and a 30 MW captive power plant as part of the project. The project includes a pipeline for the evacuation of the gas that has already been set up.

The official added that the new pricing formula, based on the Rangarajan formula linked to global hub prices, will be remunerative as the Daman gas resides in shallow water fields. The C series marginal fields, which will be integrated into the project, have started producing small quantities and has a break- even price of around $3.8/mmBtu.

Analysts say ONGC's Daman block along with its deepwater KG basin block and the Mahanadi basin blocks is among the bright spots that will make a material contribution to the company's gas production in the coming years. ONGC is also expected to hit a peak production of around 5-6 mmscmd at its Tripura gas fields.

Among the KG basin blocks, the GS 15 block is already producing since August 2012 while the G block will be on stream by September 2013. As far as the most prospective deepwater KG 98/2 block is concerned (lies adjacent to RIL's KG D6 block), the company is in talks with international partners like Shell to offload equity.

ONGC will produce gas from around 37 fields being monetised through 13 projects, most of which are on the west coast. Currently, it produces around 50 mmscmd, with Mumbai offshore basin's Bassein field contributing around half of the production.

ONGC's natural gas production slid by 4% to 6.18 billion cubic metres (bcm) in the April-June quarter mainly on the back of declining production at ageing fields like the Panna Mukta Tapti. For 2013-14, the company is targetting 24.61 billion cubic metres (BCM) versus 23.75 in FY13. This translates into an incremental growth of 2.7 mmscmd for 2013-14, which will come from the G1 field and Tripura.

Indias natural gas production has steadily declined over the last two years to 111 mmscmd in 2012-13 from 143 mmscmd in 2010-11, mainly due to the fall in production at RIL's KG D6 block.