Mumbai: Explorer-producer Oil & Natural Gas Corporation (ONGC) is to invest INR250bn ($3.91bn) in its western offshore fields, stretching from Saurashtra in Gujarat to the Kerala-Konkan coast, in an effort to obtain 3% incremental crude oil production in the three years between the ongoing financial year and 2018-19.
The Indian government has set a compound annual growth rate (CAGR) of 7% for the state-run ONGC’s production; and, to achieve this, an incremental growth of 3% from western offshore basin is required. Nearly 50% of ONGC’s total acreage of 70,000 sq km falls in the western offshore zone.
“We have a three-phase strategy,” said one of the directors on the ONGC board, requesting anonymity. “The first is to achieve field growth – around 16,000 sq km in the Mumbai offshore basin is currently under a seven-year petroleum mining lease (PML), starting 2012.
“Secondly, there will be a focus on making new discoveries in the current areas between now and 2019. And thirdly, less explored areas will be given more attention. We have already deployed the most advanced broadband technology to survey for hydrocarbon in an area that we estimate has reserves of 10bn tonnes of oil.”
The increase in output is expected from currently producing assets such as Mumbai High North (MHN), Neelam and Heera, Panna-Mukta (a joint-venture asset), Vasai, Vasai East and the newer area of Cluster 7 that includes B-192 and WO-24.
It is likely that the company will have to borrow funds to meet this programme, as its cash reserves have been eroded by the huge drop in global crude oil prices during fiscal 2014-15, and the government’s long-standing policy of having explorer-producers make up the losses of public sector refiners whose products are heavily subsidised in the market.