ONGC plans fertiliser plant as output jumps

Written by Pranav Nambiar | New Delhi | Updated: Oct 2 2013, 02:17am hrs
Public sector Oil and Natural Gas Corporation of India (ONGC) is planning to set up a fertiliser or power plant in Maharashtra to utilise its gas bounty from the nearby Daman and western offshore C-Series fields, a senior company official said.

The higher status in allocation of gas to the fertiliser sector could tilt the balance in favour of a urea plant. Everything depends on the allocation of gas. Power has lower priority than fertiliser, the official said. Although the exact investment is still being worked out, it could be R13,000-15,000 crore.

The move closely follows the commissioning of an ONGC power plant in Tripura and an agreement with the Tripura government to set up a fertiliser unit there.

ONGC recently declared that the Daman structure will be on stream by 2014-15 earlier than scheduled and also upgraded its reserves from the C-Series field. The combined output from the Daman and C-Series fields will be around 13 mmscmd of gas, up from the current 3 mmscmd.

Daman is expected to contribute 7 mmscmd of gas while the C-Series gas field which has proved to be more hydrocarbon-rich than previously thought will double output to 6 mmscmd. ONGC has fast-tracked the development of the Daman structure by four years to reap dividends earlier than previously planned.

ONGC is in the process of purchasing land at Kelwa Mahim in Maharashtra, where a gas processing plant will come up next to the fertliser plant. The official added ONGC would build a pipeline network of around 80 km to evacuate gas from the shallow water field around 30-40 meters deep. The gas will be brought to Kelwa Mahim where we have already identified land. The government is helping us to procure the same. We will set up a shore terminal to process the gas and if we get permission, we will set up a power or fertiliser plant, the official said.

Investment for the pipelines and the gas processing unit is estimated at Rs 10,000 crore. Since plans for the fertiliser plant are still being firmed up, there is no estimate of the likely investments. However, officials say ONGC might need Rs 5,000 more crore for the fertiliser plant, which was the amount it has invested in its Tripura fertiliser plant.

ONGC currently has two gas processing plants at Hazira in Gujarat and Uran near Mumbai. We cannot use our other gas processing plants as there is little capacity left to process the Daman gas, he said. The Daman plant is expected to have a processing capacity of 10 mmscmd.

ONGC has signed agreements with Chambal Fertilizers and Chemicals and the Tripura government for a 1.3-mmtpa urea plant in Tripura, in order to monetise its gas discovery in the state. It also recently commissioned the ONGC Tripura Power Corporation, a 726.6 MW gas-based power plant at Palatana in Tripura.

Venturing into non-E&P businesses is part of the company's vision document for 2030, where it also focuses on building a sustainable portfolio to transform ONGC into a major global energy company with selective participation in the energy value chain beyond E&P.

Analysts say ONGC's Daman and C series fields, along with the deepwater KG basin and the Mahanadi basin blocks are among the bright spots that will make a material contribution to its gas production in coming years. In KG basin, the GS 15 block is already on production since August 2012 and G1 will be on stream by September 2013. For the most prospective deepwater KG 98/2 block, which lies adjacent to Reliance Industries' KG D6 block, the company is currently in talks with international partners like Shell for offloading equity.

Tapping gas bounty

* ONGC to set up a fertiliser or power plant to take advantage of rich gas finds in Daman and in the western offshore C-Series fields

* The company has the option of setting up a power plant, but higher status in allocation of gas will likely tilt the balance in favour of a fertiliser unit

* This will be ONGCs second fertiliser plant in addition to the unit being set up in Tripura

* It recently declared that the Daman structure would come on stream earlier than scheduled by 2014-15 and also upgraded its reserves from the C series field

* A gas processing plant along with the fertiliser plant is planned to be set up at Kelwa Mahim in Maharashtra

* The total investments for the entire project could touch R15,000 crore