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ONGC to cut gas production by 40%

By: |
New Delhi | Published: July 3, 2015 6:17:28 PM

State-owned Oil and Natural Gas Corp will cut gas production from its biggest fields in the Arabian sea by about 40 per cent...

ONGCONGC produces 33 million standard cubic meters per day of natural gas from the Bassein field in the western offshore. (Reuters)

State-owned Oil and Natural Gas Corp will cut gas production from its biggest fields in the Arabian sea by about 40 per cent as it carries out repair work on a pipeline that carries the gas to shore.

ONGC produces 33 million standard cubic meters per day of natural gas from the Bassein field in the western offshore. The gas is carried to shore by two under-sea pipelines, a 42-inch line and a 32-inch line.

The company plans to carry out repair work on the 42-inch pipeline that carries natural gas from the Bassein field to Hazira, from July 7 to 27.
“The repair work was to last 24 days but we have squeezed it in less than three week,” a top official said. “The repair work is to tentatively start from July 7 but could be pushed back to July 8 or 9.”

This would lead to stoppage of production at some wells. “The output will fall by 13-14 mmscmd during the shutdown period,” he said.

State gas utility GAIL India Ltd, which sells gas produced from the ONGC fields to the customers, has been intimated of the shutdown.

GAIL will supply liquefied natural gas (LNG) purchased from spot market to the fertiliser plants that will be deprived of the ONGC gas.

“Power plants have said that they are not in such a dire need and they can manage without ONGC supplies. However, fertiliser plants have asked for alternate supplies.

“They do not want GAIL to give them LNG procured from Qatar on long-term contract as it costs most. Fertiliser plants want GAIL to supply LNG from spot market which is 40 per cent cheaper than Qatar gas,” the official said.

GAIL has promised to look at procuring LNG from spot market and supplying fertiliser plants.

The official said the loss of gas to city gas distribution (CGD) companies that sell CNG to automobiles and piped cooking gas to households in cities, will be made good by GAIL without charging them anything extra.

While the domestic gas is priced at USD 4.66 per million British thermal unit, LNG in the spot market is available at USD 7-8 per mmBtu. LNG from Qatar on a long-term contract costs almost USD 13.

Shares of ONGC and GAIL reversed gains after reports of the shutdown. ONGC fell 0.31 per cent to close at Rs 309.40 on BSE while GAIL dropped 0.52 per cent to close at Rs 385.40.

The official said the smaller 32-inch line will continue to operate and some gas is also being diverted to an alternate line that goes to Uran in Maharashtra.

Gas from BG Group operated Panna/Mukta and Tapti fields in the western offshore too was carried on to-be-repaired 42-inch pipeline but was last month shifted to the 32-inch line. So its 5.8 mmscmd output would not be impacted, he said.

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