UK-based Bayphase, an international oil and gas consultancy firm, has been asked by India’s upstream oil and gas regulator to ‘technically’ study the designs and feasibility of the development programme submitted by state-run ONGC to extract hydrocarbons from its deepwater block in the Krishna Godavari (KG) basin. However, with crude oil and natural gas prices being at abysmally low levels and in the absence of any incentives from the government, it may be economically difficult for ONGC to develop its deepwater block, KG-DWN-98/2.
“The upstream regulator, Directorate General of Hydrocarbons (DGH), has hired Bayphase to study the field development plan submitted by ONGC sometime back,” said a senior official working on the KG basin project. However, the official said that the final cost for the development of the block in the east coast is yet to be finalised.
On August 13, 2015, ONGC had said that it would spend about $6-7 billion to take out hydrocarbons from one of its much-touted blocks — KG-DWN-98/2 — off the Andhra Pradesh coast. But the explorer has been trying to bring down the cost by engaging advanced engineering techniques by at least 20%.
The official added that Bayphase has nearly completed its analysis and would be submitting its report to DGH shortly. Once the design and engineering model developed by ONGC is given the go-ahead by the regulator, ONGC would reach out to the government to decide on the investment.
As of now now, the first gas production from the deepwater block is expected in 2018, while crude oil output is envisaged in 2019. The peak output is pegged at 77,000 barrels per day (bpd) of crude oil and nearly 16-17 million metric standard cubic metres per day (mmscmd) of natural gas. However, considering the current scenario, these timelines are unlikely to be met,
said a senior petroleum ministry official.