Introduction
Oil and Natural Gas Corporation (ONGC), India’s largest state-owned oil and gas company, has announced the start of crude oil production from its flagship deep-sea project in the Krishna-Godavari (KG) basin block KG-DWN-98/2 . The project, which has faced multiple delays and deadline extensions over the past few years, is expected to boost India’s domestic oil output and reduce its dependence on imports.
Background
The KG-DWN-98/2 block, located off the coast of Andhra Pradesh in the Bay of Bengal, covers an area of 7,295 square kilometers and comprises three clusters of discoveries: Cluster I, II and III. Cluster II is the largest among them, with estimated reserves of 94 million tonnes of crude oil and 21.75 billion cubic meters of natural gas. ONGC has invested about $5 billion to develop this cluster, which involves drilling 34 wells and installing subsea infrastructure and a floating production unit.
Current status
ONGC has started producing crude oil from Cluster II this month, using a floating production, storage and offloading vessel (FPSO) called Armada Sterling-V, which is owned by Shapoorji Pallonji Oil & Gas (SPOG) and Malaysia’s Bumi Armada. The FPSO has been waiting to receive oil since January 2, 2024, after it was hooked up on December 27, 2023. ONGC plans to start producing from three to four wells initially, with an initial output of 8,000 to 9,000 barrels per day . The first consignment of crude oil will be sent to ONGC’s subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) for testing and grading . ONGC expects to achieve peak oil production of 45,000 barrels per day by 2026-27 from Cluster II.
Future prospects
ONGC is also working on developing Cluster III, which includes an ultra-deepwater gas discovery called UD-1, which is expected to be the world’s second-deepest when monetised. The discovery lies at a water depth of 2,841 meters and a total depth of 6,117 meters. ONGC plans to submit the field development plan (FDP) for Cluster III by January 2026. The company estimates that Cluster III has recoverable reserves of 12.65 billion cubic meters of natural gas. ONGC aims to start gas production from Cluster III by 2028-29.
Conclusion
ONGC’s flagship deep-sea project in the KG basin is a significant milestone for India’s oil and gas sector, as it marks the country’s entry into the challenging domain of ultra-deepwater exploration and production. The project will also help India meet its growing energy demand and reduce its import bill. ONGC has demonstrated its technical and operational capabilities in executing this complex project, despite the challenges posed by the Covid-19 pandemic and the difficult offshore terrain. The project will also create employment opportunities and spur economic development in the region.