BackONGC looks to make western offshore fields its production hub
ONGC has outlined a blueprint that will help it dominate the future energy landscape of the western offshore region
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Mumbai: Ahead of the entry of new energy hunters off the western coast and the start of production at its own Daman field, Oil and Natural Gas Corp. (ONGC) has outlined a blueprint that will help it dominate the future energy landscape of the western offshore region.
The plan will work at two levels, two ONGC executives said. First, the company, which has an existing network of offshore drilling rigs, pipelines and onshore units, will lease out part of these facilities to new energy firms.
Second, it will complete additional pipeline work and take over infrastructure at the dying Tapti field. This will help ONGC route gas from the upcoming Daman field through Tapti’s existing infrastructure, which would otherwise have been junked once the field fell into disuse. The plan will support natural gas production of 50 million metric standard cubic metres per day (mmscmd) by 2020, from 30 mmscmd currently, a 66% rise, making the western offshore fields its production hub, the executives said.
ONGC has consistently taken flak for its inability to raise production of oil and gas at a time of booming demand. Petroleum Planning and Analysis Cell, a statistical body under the ministry of petroleum and natural gas, says while India’s imports of crude oil rose 14% and natural gas by 19% in the last five years, ONGC’s production has remained stagnant.
Once the pipelines are in place, both the executives said, ONGC will be free to process gas from its fields at any of its onshore units and offer the same facilities to new energy firms for a fee.
ONGC has two onshore processing units—Hazira in Gujarat and Uran in Maharashtra —which separate impurities from extracted gas. New companies are expected to start hunting for energy in the neighbourhood of ONGC’s mid-sea assets, once the government auctions its undeveloped marginal fields this year.
“Once new companies step in to develop the marginal fields, they can use our infrastructure available in the western offshore for a fee. This will be a win-win for both," said S.K. Moitra, executive director who manages the Bassein and satellite assets.
The development and utilisation of infrastructure in the western offshore region will give ONGC “a high degree of operational flexibility and help efficient use of infrastructure," Moitra added. Leasing out infrastructure will also expedite ONGC’s return on investments, he said.
ONGC has three major mid-sea assets off the west coast: Mumbai High, India’s largest oil field; Bassein and satellite fields, which produce gas; and Neelam and Heera fields, which produce both. Its Daman field is expected to start pumping gas by 2019.
Mumbai High, ONGC’s biggest oil field, pumps 210,000 barrels of oil per day and its biggest gas field at Bassein 24 mmscmd of gas.
In November, the ONGC board approved a total investment of ₹ 10,600 crore in the western offshore fields over the next five years to increase production. Of this, ₹ 6,069 crore will go into the third phase of Mumbai High redevelopment, while the remaining will go into developing Bassein and adjoining areas, including Daman.
“With this kind of an investment in increasing production and setting up infrastructure, our presence in western offshore will be unmatched by any company in India and we can get tolling, processing and transportation fees from any new company entering the region," said Moitra, adding the company has spent three decades developing and sustaining production from the fields in the region, thereby gaining sufficient experience of the complexities available.
ONGC is also planning to take over the soon-to-be-idled infrastructure of the Tapti gas field in the western offshore region—part of the Panna-Mukta-Tapti joint venture. The Panna-Mukta-Tapti fields are owned by a consortium of ONGC, Reliance Industries Ltd and BG India. ONGC owns 40% while RIL and BG India own 30% each. BG India is the operator of the asset. The Tapti field is expected to dry out by June. ONGC has already won approval from the government to take over its infrastructure free of cost from BG India. This includes the Tapti processing platform and a 70km pipeline connecting it with the Hazira facility.
There are doubts if all this will significantly change ONGC’s fortunes. “I still maintain that the only trigger for the company in such times of low crude prices is clarity on the subsidy sharing mechanism. The government has still not specified how much of the subsidy ONGC will bear when the losses of oil refining and marketing companies have fallen substantially," said Dhaval Joshi, analyst with brokerage Emkay Global Financial Services Ltd.
He said the domestically produced natural gas prices in India has also fallen, forcing ONGC to clock lower numbers on gas price sales for the next six months. “Unless crude price increases, there is no hope for better prospects of exploration companies such as ONGC and Oil India Ltd."
The government on 1 April cut the price of domestically produced natural gas by 7.72% to $4.66 per million British thermal units (mmBtu) from the current $5.05 per mmBtu on a gross calorific value basis.
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