ONGC Plans to Spend $9B to Develop Upstream Assets in India's KG Basin

India's state-owned Oil and Natural Gas Corporation Limited (ONGC) planned to spend over $9 billion in development expenditure to bring into production the firm's upstream petroleum assets in the Krishna Godavari basin off India's east coast by 2017-2018, local media The Economic Times reported Sunday.

"We are looking at producing 2.5-3 million tons of oil (per annum) and 317-353 million standard cubic feet (9-10 million standard cubic meters) per day of gas from the Northern Development Area of Block KG-DWN-98/2," ONGC Director (Exploration) NK Verma said, as reported in the Indian daily.

ONGC has divided Block KG-DWN-98/2, which contains 11 oil and gas discoveries, into a Northern Discovery Area (NDA) and a Southern Discovery Area (SDA). The block lies next to Reliance Industries' KG-D6 Block and Gujarat State Petroleum Corporation's Deendayal gas field.

NDA contains around 92.30 million tons of oil reserves and 3.44 trillion cubic feet (97.568 billion cubic meters) of in-place gas reserves spread over seven fields.

ONGC has submitted to India’s Directorate General of Hydrocarbons (DGH) a Declaration of Commerciality (DoC) for the oil find in the NDA and a detailed field development plan will be submitted within a year, Verma said.

ONGC has 90 percent interest in Block KG-DWN-98/2, while Cairn Energy India Ltd. holds the remainder. Cairn, which sold the 90 percent stake to ONGC in 2005, made four discoveries in the area – Padmavati, Kanakdurga, N-1 and R-1 (Annapurna), while ONGC made six discoveries – E-1, A1, U1, W1, D-1 and KT-1 in NDA and the first deepwater discovery UD-1 at a record depth of 9,320 feet (2,841 meters).

Petroleum discoveries in the NDA comprises Padmawati, Kanadurga, D, E, U, A, while the UD find lies in SDA.

ONGC intends to produce oil and gas from NDA using a floating production, storage and offloading (FPSO) unit, The Economic Times quoted Verma as saying.

"We are also studying the economic and technical feasibility of using facilities at neighboring KG-D6 block," Verma indicated, with ONGC considering the option of diverting some petroleum supplies to Reliance Industries' infrastructure for transmission to Kakinada in Andhra Pradesh, where they can be sold to consumers.