ONGC to Begin Oil Production from KG Block in 2019

New Delhi: State-owned ONGC's significant oil discovery in Bay of Bengal will begin production in 2019, with a peak output of 4.5 million tonnes a year, 20 per cent more than previous estimates.

The oil discovery in Krishna Godavari basin block KG-DWN-98/2 or KG-D5 will be the first large oil production from the east coast. The block also has 10 gas discoveries.

"We are moving fast on KG-D5 development. First gas from the block is planned for 2018 and first oil in 2019," Oil and Natural Gas Corp (ONGC) chairman and managing director Dinesh K Sarraf told reporters here.

While a bulk of its near 25 million tonnes crude oil production comes from western offshore and fields in states like Gujarat and Assam, KG-D5 will produce up to 90,000 barrels per day (4.5 million tonnes per annum) - the largest from any field on the east coast.

"Conservative estimates put the production at 75,000-plus bpd," he said.

Another company official put the peak output at 90,000 bpd.

ONGC will produce 17 million standard cubic meters per day of gas from the block, which sits next to Reliance Industries' producing KG-DWN-98/3 or KG-D6 area.

"We plan to put to production discoveries in northern part of the block together with finds in a neighbouring block," he said, adding the company is currently working on a field development plan which will detail investment required.

KG-D5 is divided into a Northern Discovery Area (NDA) and Southern Discovery Area (SDA).

Investment in NDA may be at least $9 billion, a senior company official said, adding the company's internal assessment was that gas can start flowing from the block only in 2021-22 but Sarraf wants the development to be fast-tracked so as to begin production by April 2018.

NDA holds an estimated 92.30 million tonnes of oil reserves and 97.568 billion cubic metres of inplace gas reserves spread over seven fields.

ONGC bought 90 per cent interest in Block KG-DWN-98/2 from Cairn Energy India Ltd in 2005. Cairn subsequently relinquished its remaining 10 per cent interest in favour of ONGC.

Before selling most of its stake and giving away operatorship of the block, Cairn made four discoveries in the area - Padmavati, Kanakdurga, N-1 and R-1 (Annapurna).

Subsequently, ONGC made six significant discoveries - E-1, A1, U1, W1, D-1 and KT-1 in NDA and the first ultra-deepwater discovery UD-1 at a record depth of 2,841 metres.

The NDA comprises discoveries like Padmawati, Kanadurga, D, E, U, A, while the ultra deepsea UD find lies in SDA.

Block KG-DWN-98/2, comprising 7,294.60 square kilometres, was originally awarded to Cairn in the first round of auction under New Exploration Licensing Policy (NELP) in April 2000.

Of this, 2,4623 sq km has been relinquished and ONGC currently holds 3,800.6 sq km in NDA and 3,494 sq km in SDA.