ONGC Offers Stake In KG Basin Block To Global Firms

State-owned Oil and Natural Gas Corporation (ONGC) is offering a stake to foreign companies in its ultra deep-sea gas discovery and a high-pressure, high-temperature block in the KG basin. It looks for financial and technological help to bring the challenging fields to production.

ONGC has floated an initial tender seeking the interest of global majors with "requisite technical expertise and financial strength" to join as partners in developing the Deen Dayal West (DDW) block and ultra-deep discoveries Cluster-III of its KG-D5 area.

Expressions of Interest (EoIs) have been invited by June 16, according to the tender floated by the company.

While ONGC had made a gas discovery UD-1 in the KG-D5 block in a water depth of 2,850 metres (almost 3 kilometres), the firm had in August 2017 paid Rs 7,738 crore for buying 80 per cent stake in the DDW block from a Gujarat government firm GSPC.

On the one hand, ONGC does not have the requisite technology and expertise to develop the UD discovery, which lies about 150-km from the coast. On the other hand, it hasn't had much success in the DDW block, which holds reserves at high pressure and high temperature (HPHT).

ONGC is seeking technology partners and service providers to develop the two and is willing to offer an equity stake to firms interested, the tender document said.

It, however, did not say how much equity stake the company would offer.

At the time of the stake acquisition from GSPC in 2017, ONGC stated that the acquisition fits well with its strategy to enhance natural gas production from domestic fields at a faster pace.

It had plans to use GSPC field facilities to produce the discoveries in its neighbouring KG-DWN-98/2 (KG-D5) block.

But the seven wells drilled to date did not yield much success. The plan to use DDW facilities, too, hasn't materialised.

"Four completed wells did not yield good productivity as anticipated, and sub-optimal performance. Severe technical challenges and complications were encountered in other three wells and had to be abandoned," the tender document said.

GSPC had nine gas discoveries in the Bay of Bengal block. Three -- KG-08, KG-17, and KG-15, commonly known as DDW fields -- had been approved for development.

ONGC had said it wants to revise the field development plan after firming up the good engineering and completion strategy to implement new wells.

"The objective of EoI is to assess the interest level of potential partners (E&P companies, service providers and technology players) to join as partners to carry out revised field development plan," it said.

ONGC holds 100 per cent interest in KG-DWN-98/2 or KG-D5 block in the Krishna Godavari basin.

The block sits next to Reliance Industries' KG-D6 area.

The block, ONGC said, has three sets of discoveries - Cluster-I in the northern part, Cluster-II and Cluster-III in the southern part.

ONGC is developing oil and gas discoveries in Cluster II on its own. Oil production will likely start by the end of the year and gas by May 2023.

"In the year 2006, the well UD-1 made a Miocene biogenic gas discovery at ultradeep water depths," The tender document added five out of the seven appraisal wells drilled have confirmed the consistent presence of 60 metres of gas-bearing sands.

Currently, ONGC is engaged in the preparation of the Field Development Plan.

"Considering the inherent knowledge, cost and technology challenges associated with the field, ONGC would like to seek technical expertise to firm up a way forward for future development of UD deepwater portfolio," it said.