ONGC plans to ‘aggressively’ bid for oil blocks: Director-Exploration

ONGC is expected to look at new blocks for exploration as the company’s output has remained steady over the past few years.

Oil & Natural Gas Corporation Limited (ONGC) plans to “aggressively” bid for oil blocks offered for exploration and development in the latest round, a top company executive said.

The Indian government launched the ninth round of the open acreage licensing policy (OALP-IX) for international competitive bidding on January 3, offering 28 blocks with an area of 136,596 sq. km. The blocks are spread across eight sedimentary basins of which nine are on-land, eight are shallow water, and 11 are ultra-deep water.

“We have done a lot of interpretation and subsurface analysis of data. So, we are going to go very aggressively in the ninth round. We know where it is going to be prospective, whether on-land or offshore. So, we are ready to go for bidding,” Sushma Rawat, director (exploration) at ONGC, told Moneycontrol.

The company will look at both on-land and offshore blocks in the ninth OALP round, she said. Bidding for the ninth OALP round concludes on February 29.

Companies including Oil India, Reliance Industries along British Petroleum may also bid in the OALP-IX round. ONGC is expected to look at new blocks for exploration as the company’s output has remained steady over the past few years.

Low output

As India’s energy consumption increases and its reliance on imports grows, the government is keen to boost domestic oil and gas production. The government has been pushing for increasing exploration and has opened up areas that were once marked as “no-go areas.”

India is the world’s third-largest energy consumer, with domestic oil production meeting less than 15 percent of its needs.

Domestic crude oil production has remained low in India primarily due to aging oilfields. In November 2023, the country’s crude oil and condensate production was 0.4 percent lower than in the previous year, according to oil ministry data.

While launching the ninth OALP round, minister of Petroleum and natural gas Hardeep Singh Puri said only 10 percent of India’s sedimentary basin area is under active exploration. However, after blocks are awarded in the OALP-IX and X bid rounds, about 560,000 sq. km. or 16 percent, will be under exploration by the end of 2024.

The government has said an outreach programme has also been taken up by organising investor meetings at prominent global locations and international conferences to attract bidders.

ONGC’s recent win

ONGC started crude oil production from its Krishna Godavari basin on January 8, after a delay of over two years. Rawat told Moneycontrol that she sees a peak output of 45,000 barrels per day (bpd) from the block in two to three years.

The deep-water KG-DWN-98/2 block in the Bay of Bengal is likely to increase ONGC’s oil and gas production by 11 percent and 15 percent, respectively. Peak gas production is expected to be over 10 million standard cubic metres per day.

Rawat said additional investments would be made as ONGC goes ahead with the development of the KG basin block.

“Lot of investments are already in place. Currently, we have opened up four wells (in the KG basin) and are getting oil from them. Thereafter, somewhere in June, we will be starting gas production as well. The investments would be coming along as we go in with development (of the block),” she said.

Rawat said ONGC is set to finalise the location for drilling of wells in the Andamans by the end of May. The oil explorer has two blocks in the Andaman basins, which the company won in the sixth OALP round.

She said ONGC has planned exploration capex of Rs 30,000 crore to 34,000 crore in the next three years.

“If the acreages are going to increase, the appraisal will also increase. If exploratory wells are offshore, drilling of wells has slightly more expenditure attached with it,” she said.