ONGC gears up for next round of oil block bids expected to start in July

ONGC

Oil and Natural Gas Corporation (ONGC) expects India’s ninth round of oil block auctions to start in July and is approaching foreign companies for potential partnership in joint exploration.

The government has announced the offer of 26 blocks in the 9th Open Acreage Licensing Policy (OALP) round, but bidding has not opened yet. The blocks cover an area of over 223,000 square km. Fifteen blocks are in ultra deep water, eight blocks are in shallow water and three are on land.
State-run ONGC has started talks with foreign companies for joint exploration of these blocks.

“Contracts and MoUs are in place, but we have also written to them (foreign companies) and told them that the OALP 9th round is going to most probably be opened up in July. It has been about a week that we have spoken to them. We are waiting for the reply,” said Sushma Rawat, director (exploration), ONGC.

Rawat said ONGC is looking forward to forming partnerships with foreign companies for bidding in the Andaman-Nicobar basin, where four blocks are on offer, but will also bid alone.

“If the MNCs come, that is absolutely welcome. That is the boost regarding the potential of the basin. Otherwise, we ourselves know that some areas really hold promise. So, ONGC would be going for bidding alone also in some of the areas,” said Rawat.

ONGC is looking at partnership with foreign players such as TotalEnergies, Chevron and ExxonMobil for high-end technologies.

Meanwhile, the deadline for submission of bids for the 8th OALP round, which was launched on July 7, 2022, was deferred to July 5.

The OALP mechanism was launched under the Hydrocarbon Exploration and Licensing Policy and allows investors to carve out blocks of their choice by assessing exploration and production (E&P) data.

East coast exploration

ONGC closed FY23 with production dropping 0.6 percent. Its output has declined gradually over a decade as its fields are old and aging. The company expects to reverse the trend, boosted by the KG-DWN 98/2 block in the Krishna Godavari (KG) basin in the Bay of Bengal. ONGC said production may grow 11.6 percent in FY24.

Rawat said ONGC sees huge potential off the east coast of India and will go “really strong” in the area.

“We already have acreages and prior commitments and we would be coming up with the drilling phase in the Mahanadi as well as in the Kaveri offshore water,” said Rawat.

There are four major basins off the east coast – Cauvery, Krishna-Godavari, Mahanadi and Palar. In the upcoming round, four blocks are in the Mahanadi basin and three in the Cauvery basin.

Oil India, another state-owned producer of oil and gas, is also keen to bid in this area as it needs exploration attention, director (exploration and development) Manas Kumar Sharma told Moneycontrol.

New territories

Indian oil and gas companies are looking forward to tie-ups with foreign companies majors for exploration in the Andaman-Nicobar basin. The government opened up acreages in Andaman – once considered a no-go area – with the objective of increasing domestic oil and gas production.
India imports over 85 percent of its crude oil consumption and about 50 percent of its natural gas requirements.

Rawat told Moneycontrol that 2D data collection for the Directorate General of Hydrocarbons-backed survey of the exclusive economic zone (EEZ) was completed last week and it will be processed soon.

The survey acquired over 22,000 line kilometres (LKM) of 2D data in the region. ONGC has already completed the survey of the two blocks it has in the Andamans from the sixth round of OALP.