ONGC to Invest $406 Million in Arabian Sea Oil Field
March 25, 2014 2:51 PM EST
State-run Oil and Natural Gas Corp (ONGC.NS) said on Monday it would invest an additional 24.8 billion rupees for development of its Vasai East oil and gas fields in the Arabian sea.
A technician opens a pressure gas valve inside the Oil and Natural Gas Corp (ONGC) group gathering station on the outskirts of Ahmedabad March 2, 2012.
The state-run company expects an incremental oil production of 1.83 million metric tonnes and gas production of 1.97 billion cubic meters by 2030 after the completion of the project by 2018, it said in a statement to the exchanges.
State explorer Oil and Natural Gas Corp (ONGC.NS) expects peak gas output of 25-30 million standard cubic metres per day (mscmd) from its block off the east coast, Exploration Director N K Verma said.
Gas production from the deep water block in the Krishna Godavari (KG) basin will begin in 2017. The northern part of the block holds over 2 trillion cubic feet (tcf) of gas, Verma told reporters.
ONGC, which has struggled to maintain production from its ageing wells off the west coast, has said previously it hopes to produce from 6 to 9 mscm of gas a day by 2017 from its east coast block.
Gas output from the block will be profitable for ONGC as India is moving to a new pricing regime from April 1 linking local prices with global indexes. Local prices will be reviewed every three months.
ONGC sees local gas prices rising to about $8 per million British thermal units (mmBtu) from April 1 from $4.2/mmBtu now, D.K. Sarraf, chairman of ONGC, told reporters.
Sarraf said every dollar increase in gas prices would increase ONGC's annual revenue by 40 billion rupees and profit after tax by 24 billion rupees.
Higher gas prices will help ONGC make investments to arrest a decline in oil and gas output from its older fields, Sarraf said and ONGC aims to raise its output to 130 million tonnes of oil and oil equivalent a year by 2030 from 60 million tonnes at present.
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