ONGC for own facility to process east coast output

Written by Siddhartha P Saikia | New Delhi | Updated: Jul 17 2014, 08:24am hrs
ONGCDumps earlier strategy to use RIL?s under-utilised station
State-run oil and gas major ONGC is readying a $1.5-billion plan to set up its own oil and gas processing terminal on the east coast rather than sharing the under-utilised facility being set up by Reliance Industries (RIL) to process hydrocarbon from its KG-D6 block.

The feasibility study shows that using the RIL infrastructure would not be economically viable as it would required to connect gas pipelines under the sea. Moreover, ONGC wants to connect three different acreages to a single terminal for processing both oil and gas, a senior official at the PSU working on the project told FE.

ONGC wants to inter-connect the three acreages to the processing terminal: KG-DWN-98/2 (which is divided into northern and southern areas), the Vashishta field clusters and G4 in the same waters. The KG-DWN-98/2 block was bagged under NELP auctioning, while Vashishta and G4 acreage were allotted to the explorer in the pre-NELP era. The northern area of the NELP block along with the pre-NELP areas are estimated to hold about 3.5 trillion cubic feet (tcf) of gas and 100 million tonnes of crude oil. At peak production, which is generally achieved after three to four years of the fields being put under production, the acreages are expected to produce 27 million metric standard cubic metres per day (mmscmd) of gas and 75,000 barrels of oil per day (bpd).

Former petroleum minister M Veerappa Moily pursued both ONGC and RIL to study if the infrastructure set up by the Mukesh Ambani-led firm can be utilised by the PSU too. This is mainly because RILs production facilities were set up to process natural gas to a maximum level of 80 mmscmd.

However, the output is hovering around 12.88 mmscmd and the facilities are under-utilised.

In July 2013, ONGC and RIL signed a memorandum of understanding aiming at working out the modalities for sharing of infrastructure, identifying additional requirements as well as firming up the commercial terms. The agreement will minimise ONGCs initial capital expenditure and help in early monetisation of its deep-water fields, then ONGC chairman Sudhir Vasudeva had said.

According to the ONGC official, the explorer is awaiting the go-ahead from the oil regulator, Directorate General of Hydrocarbons (DGH), on the declaration of commerciality (DoC) for the KG-DWN-98/2 block. Once the DoC is cleared, it would require six months to prepare a field development plan, the official added.

ONGC has appointed Norwegian oil and gas industry service provider Aker Solutions to chart out the field development plan for the KG Basin block.

Once the field development plan is ready, the actual cost for the processing terminal would be known. On rough estimates, it should cost around $1.5 billion, the official explained.

ONGC would require a floating production, storage and offloading to process the crude oil from the east coast, which will be placed along with the gas processing terminal.