State-run ONGC plans to commence oil and gas production from the Krishna Godavri basin in a month and start pumping hydrocarbons from another block in the offshore region next May, top company officials said. ONGC has revised its production schedule from the G1 and GS15 blocks, which hold 21 million tonnes of oil and gas, following some technical issues and problems with an Australian contractor, who quit the project, delaying its completion.
The company was initially planning to start production in July. "We were earlier planning to begin production from the GS 15 block in the KG basin by July-end , but now it might take another 2-3 weeks as we need to sort out some technical issues," said AK Hazarika , chairman ONGC.
He did not elaborate on the technical issues. In an email response, ONGC said: "Production from the G1 field is expected to start by May 2012." The project is nearly five years behind schedule as gas production from the GS15 block was originally meant to commence in April 2006. "The long delay was largely caused by the Australian contractor Clough Engineering that went bankrupt and quit the project and PSUs typically take a very long time to renegotiate contracts ," said RS Sharma, exchairman , ONGC. Leighton India had now been awarded a $17-million contract for completion of the offshore installations.On the pricing front, ONGC said in the email, "Price of non-APM gas from nominated blocks in KG Basin is fixed as $4.5/mBtu." Another contentious issue as Sharma said, "The entire KG project will be commercially unviable at these pricing levels as $4.2 or $4.5 per mBtu just does not take in to account the overall investment costs especially as oil field services and offshore construction are extremely expensive nowadays." ONGC is also planning to divest a 30% stake in its KG DWN 98/2 block and is in talks with BG Exploration and Production, India, and Italian exploration and production major, ENI. "Discussions are still on with both BG and ENI and we are awaiting permission to drill additional wells in the block to ascertain the volume," said Hazarika.
ONGC had said that it had been requesting the DGH and the petroleum ministry for permission to drill additional exploratory wells for firming up a field development plan with least uncertainties . ONGC said the matter of drilling additional exploratory wells was discussed in a technical committee meeting held on January 17, and subsequently a communication has been sent to DGH indicating requirement of eight wells in the block.
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