Home >Companies >ONGC to spend 15,000 cr to drill 480 wells this fiscal

New Delhi : Oil and Natural Gas Corp. Ltd (ONGC) will spend about 15,000 crore to drill 480 wells in 2012-13, the most in the past 17 years, as India’s biggest oil and gas explorer battles concern over its production capabilities and diminishing yields at its ageing oil fields.

Of the 480 wells, 125 will be offshore, said U.N. Bose, director of technology and field services at ONGC. “We have already drilled 100 wells this fiscal."

Energy demand: A file photo of an ONGC offshore platform. The firm is targeting production of more than 130 mtoe in 2030.(Bloomberg)

ONGC said earlier this month it has made a big discovery off the nation’s western coast taking the initial oil-in place reserve at its D1 field to one billion barrels.

Most of the company’s domestic fields are more than 30 years old. While ONGC’s domestic reserves increased to 1,287 mtoe in 2011-12 from 1,243 mtoe in 2010-11, its production declined to 52.4 million tonnes (mt) from 52.6 mt in that period. ONGC had drilled 415 wells in 2011-12 at an investment of about 13,000 crore.

“In spite of frequent additions to its oil and natural gas reserves, production growth has been very slow in the recent past," BOB Capital Markets Ltd said in a 31 May report. “Industry-leading reserve replacement ratio has not translated into higher production. For example, exploration in the KG (Krishna-Godavari) basin has been going on for 11 years now."

At 5.7 billion barrels of oil equivalent (bboe), India’s proven balance recoverable oil reserves amount to 0.3% of world’s total reserves, according to BP Statistical Review 2012.

State-controlled ONGC is entrusted with ensuring India’s energy security and has a total of 125 rigs working on various drilling programmes across the country.

“We have a total of 90 onshore rigs of which 70 are ours. For our offshore drilling programme, we have 36 rigs of which nine are ours and the balance 27 chartered from other service providers. We have brought more technology to our exploration and production programme," said Bose.

It has also been scouting abroad for opportunities to plug technology gaps and to leverage the strengths of large oil companies. Mint reported on 27 July that ONGC has shortlisted 10 companies, including the world’s top hydrocarbon exploration service providers Schlumberger Ltd, Petroleum Geo-Services ASA and CGGVeritas, for a seismic survey of 19,000km of exploratory blocks. The tender for the survey is valued at around 1,200 crore.

While India has 26 sedimentary basins, covering 3.14 million sq. km, only 22% has been moderately-to-well explored, with 34% remaining poorly-to-completely unexplored.

With interest in India’s hydrocarbon sector waning in recent months, and foreign firms planning to exit their oil and gas exploration and production businesses, it will depend on ONGC and state-run Oil India Ltd to boost the nation’s energy production.

According to ONGC’s Perspective Plan 2030, the company aims to unlock more than 450 mtoe from “yet-to-find" reserves. The company is targeting production of more than 130 mtoe in 2030, of which half will come from assets owned by its overseas arm ONGC Videsh Ltd. The explorer made an investment of 22,700 crore in the 10th Plan (2002-07) and increased it to 1.7 trillion in the recently ended 11th Plan (2007-12). It now seeks to spend 2.65 trillion in the 12th Plan (2012-17).

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