ONGC to spend Rs34,488cr on developing K-G block

Oil and Natural Gas Corp, the state-run explorer, plans to invest  Rs34,488 crore ($7.7 billion) to develop a gas field in the Krishna-Godavari basin close to Reliance Industries' prolific D6 block to produce up to 30 million cubic metres a day in five years, The Economic Times reports.

The company plans to drill eight additional wells in the block to maximise output from the deep-sea field in the Bay of Bengal, and has sought approval for the plan from the Directorate General of Hydrocarbons and the petroleum ministry, the newspaper said, citing an emailed response from ONGC.

"The matter of drilling additional exploratory wells in the block was discussed in a technical committee meeting held on 17 January 2011 and subsequently a communication has been sent to DGH indicating a requirement of eight wells in the block - six in NDA and two in SDA," the email said.

ONGC said it has submitted a proposal for declaration of commerciality (DoC) to the DGH that in-place gas reserves of 3.42 trillion cubic feet (tcf) have been established in the KGDWN-98/2 block, of which, 1.904 tcf is recoverable.

The KG-DWN-98/2 block has 10 gas discoveries and Cairn India is already a 10 per cent partner in the block. The company plans to produce 25-30 million standard cubic metres per day of gas from the block by 2016-17.

The KG Basin is India's most prolific gas basin and home to some of India's biggest natural gas discoveries in recent years. Apart from Reliance, Gujarat State Petroleum Corp has also discovered natural gas in the same region.

ONGC has been scouting for partners to develop the block as it does not have experience in developing fields in ultra-deep regions in the sea. "A total lifecycle cost as per the proposal for DoC is of the order of $ 7.7 billion," ONGC said.