ONGC to spend Rs 65,773 cr on ramping production from ongoing field development projects: Motilal Oswal

Banco, Banquero, Venezuela, Caracas, Banco Activo, Activo, Banco

New Delhi: Oil and Natural Gas Corporation ( ONGC ), the country’s largest producer, is expected to spend about Rs 65,773 crore to ramp up production from 13 field development projects and three Enhanced Oil Recovery/Improved Oil Recovery (EOR/IOR) projects, brokerage firm Motilal Oswal said in a recent report. The ongoing field development and EOR/IOR projects are expected to produce a cumulative of 54.6 million tonne (mt) of crude oil and 114 billion cubic meter (bcm) of natural gas in the next three to four years, the report said. “The 13 field development projects are expected to generate around 40.9 million metric tonnes (mmt) of oil, 8.3 mmt of condensate and about 105.5 bcm of gas over the next three to four years, while the three IOR/EOR redevelopment projects will add around 13.7 mmt of oil and about 8.7 bcm of gas,” the report said. Close to 50 per cent of 54.6 mt of crude oil is expected to be produced from the field development of New Exploration Licensing Policy (NELP) block — KG-DWN98/2. Similarly, close to 40 per cent of 114 bcm of natural gas is expected to be produced by the KG block alone. “The company guides that its standalone total gas production may rise to around 43 bcm by financial year 2021-22 (FY22) from around 27.4 bcm in FY19 (up 6.5 per cent year-on-year), primarily led by KGDWN-98/2,” the report said. The development of the above mentioned field is expected to be completed by August 2021 at a cost of Rs 34,012 crore and is expected to produce 25.9 mt crude oil and 45.5 bcm natural gas. The report added, “We revised our gas production assumption for FY21, with estimated growth of around 7 per cent to 11 per cent in FY20 and FY21 coupled with production coming online from KG-DWN98/2. Our assumptions are conservative compared to the company’s guidance due to expected delays in execution amidst difficult topology for key projects (such as KG-DWN-98/2).” The report estimates ONGC’s crude oil production to touch about 24 mt for financial year 2020/2021. The development of the above mentioned projects will bode well for the company, which has been trying to arrest a declining crude oil production trend. ETEnergyWorld had last month reported that ONGC’s standalone crude oil production fell to its lowest level in FY19. Oil output recorded by the company declined 5.42 per cent to 21,042 thousand metric tonne (TMT) FY19 as compared to 22,249 TMT produced in FY18. On the brighter side, the company’s standalone natural gas production increased 5.31 per cent to 24,675 million standard cubic meter (MMSCM) in FY19. The company’s standalone natural gas production grew for the third-straight year in the previous financial year. According to budget estimates, the company plans to spend about Rs 32,921 crore in the present financial year, down marginally from Rs 33,007 spent in FY19.