New Delhi: To step up oil and gas production and meet the target of reducing import dependence on fossil fuels, state-owned Oil and Natural Gas Corp. (ONGC) on Thursday decided to invest Rs7,327 crore in five assets, four of which are located in the western offshore region and one in the Cambay basin in Gujarat.
ONGC’s decision is in line with the government’s idea of public investments taking the lead in stimulating the economy. For 2017-18, ONGC has planned an investment of Rs29,967 crore, slightly more than what it spent the year before, according to Union budget documents. ONGC had last March announced plans to spend $5 billion over three years to develop two fields in the Krishna Godavari basin.
ALSO READ | ONGC takes profit hit from royalty payments
The company’s investment drive comes in the wake of the government’s target of reducing import dependence on oil and gas by 10 percentage points to 67% by 2022.
Out of the capital spending approved on Thursday, the western offshore R-series fields including Ratna—which were restored to ONGC in 2016 after the government dropped its plan to let a private consortium develop it—will attract the highest investment of Rs4,104.6 crore and could yield 8.4 million tonnes of oil and 1.7 billion cubic metres of gas during its life, the company said in a statement.
Oil production is expected to commence from this asset by 2018-19 and reach a peak production rate of over 14,500 barrels a day in 2019-20, the company said in a statement.
The other fields that are being developed are Santhal field in the Cambay basin and the western offshore fields named as B-147, BSE-11 and NBP.
Contrary to the global trend of oil majors cutting back on capital spending, oil companies in India are trying to take advantage of the prevailing low cost of oil and gas field services to develop new discoveries or to enhance fuel recovery from producing fields.
R.S. Butola, who was previously the managing director of ONGC Videsh Ltd. and subsequently the chairman of Indian Oil Corp., said that since oil discovery has already been made in R-series fields, there is hardly any exploration risk there. The robust consumption of hydrocarbons in Asia is one factor driving investments in the sector, he said. International Energy Agency had said in a 2015 report that Southeast Asia’s energy demand will grow by 80% from that year to just under 1,100 million tonne of oil equivalent (mtoe) in 2040.
Private firms planning major capital spending include the Reliance Industries-BP Plc-Niko Resources consortium developing their assets in the Krishna Godavari basin and Cairn India Ltd. that is keen to boost output from its Rajasthan oilfield. The other major areas of investments in the hydrocarbon sector at present are city gas distribution, long distance gas pipeline network, modernization of refineries to meet BS 6 emission norms and liquified natural gas import terminals.