ONGC to outsource gas production in KG basin

Hyderabad: State-owned oil and natural gas major ONGC will be outsourcing gas production activities at some of its marginally-filled and isolated wells in Krishna-Godavari basin to other companies on production sharing basis, sources close to the development said on Wednesday.

It is not economically viable to the company to produce gas in those wells where the output pressure has fallen below required limits, according to sources.

"Hence, we have decided to outsource 40 of such wells in KG Basin where the pressure gas has gone below 700 PSI which is essential to connect to GAIL pipeline. We may get 40-60 per cent of the gas produced by the private operators depending up on the well," sources told PTI.

According to industry analysts there can be a further production of 10,000 to 20,000 cubic meters of gas from those wells for a period of 2-5 years.

ONGC earlier had said it will not be economically viable to produce gas from its Krishna-Godavari basin block at current sale price of USD 4.20 per mmbtu and 60 per cent of the international price for oil.

However, the Government had argued that the current blocks were allotted on nomination basis and the price is justifiable.

When contacted an ONGC spokesperson said previous investments made by ONGC in these idle assets (marginal fields) has been recovered and it plans to outsource fields in Western Offshore basin also.

The approximate turnover of KG Onshore asset to ONGC is Rs 1,000 crore involving production of around 950-980 tons per day of oil and 38 million standard cubic meters of gas per day with value added products of 67000 tons per annum.