ONGC to acquire drilling rig for deepwater probes

June 12, 2002
India's Oil & Natural Gas Corp. (ONGC)—currently sitting on a tight, 4-year deepwater exploration schedule—said it expects soon to acquire a deepwater rig for $100-150 million.

By an OGJ correspondent

MUMBAI, June 12 -- India's Oil & Natural Gas Corp. (ONGC)—currently sitting on a tight, 4-year deepwater exploration schedule—said it expects soon to acquire a deepwater rig for $100-150 million. "Over the next few years, we will be drilling exploratory wells in the deep water off Kutch, Mumbai, Cauvery, and in the Krishna-Godavari offshore regions and perhaps in the deep waters near the mouth of the Mahanadi," said Y.B. Sinha, ONGC's director, exploration.

To date, ONGC has reported two major hydrocarbon discoveries in the deepwater regions. The first discovery, drilled in August 1999 by the Sagar Vijay drillship, found oil and gas in 900 m of water at the G-1 prospect in the Krishna-Godavari offshore region. "G-1 should come up for development in the next 2 years," Sinha said. Development of the G-1 discovery is expected to yield 1.5 million cu m/day of gas and 2,500 b/d of oil, Sinha said.

The second find was reported in November 2000 at a location called KD-1-1—which also lies in the Krishna-Godavari region—in 844 m of water.

ONGC is in the process of acquiring 3D seismic data. "The company is also in the process of formulating a model for developing small and marginal fields by subcontracting the production activity," Sinha said. "We have 96 marginal fields, which were not economical when crude prices were (trending) soft. However, now, with the hardening of crude prices over the last few months, oil can be produced profitably from these fields. However, rather than doing it ourselves, it makes economic sense to contract out this production."

NELP I, NELP II blocks
ONGC has completed the process of acquiring seismic data covering blocks awarded under NELP-I (the first phase of the New Exploration Licensing Policy). It will take until yearend for the data to be properly interpreted. After that, ONGC expects to launch exploration and drilling projects on the NELP-I blocks.

Of the 25 exploration blocks awarded under NELP-I, ONGC received eight—five on its own, two in consortium with Indian Oil Corporation, and one in partnership with Gas Authority of India Limited.

Under NELP-II, ONGC was awarded 16 of the 23 blocks on offer. Sinha explained that seismic data acquisition work is being conducted on these blocks, and the results are expected by mid-June. Interpretation work would be completed by yearend, he predicted.

"The company has set itself a target of 25.90 million tonnes of oil production and 19.24 billion cu m of gas sales for the financial year 2002-03," he said. "We expect a 60 million tonne increase in our reserves, of which 20 million tonnes will come from the Sakhalin [Island Sakhalin-1 project] in Russia."

ONGC Videsh Ltd., ONGC's international arm, has invested $1.7 billion in the Sakhalin-1 project (OGJ, May 27, 2002, p. 20), which is the single largest investment made by any Indian corporation abroad. "Taking an average price realization of $18/bbl of crude oil on an FOB basis, we are targeting a net profit of 52.48 billion rupees ($1.07 billion) for fiscal 2002-03," Sinha said.