Oil and Natural Gas Corporation (ONGC) foresees gas production rising significantly in the coming years as the company plans to monetise its gas discoveries amid better market prices, Sushma Rawat, director, exploration, told Moneycontrol.
ONGC’s gas production is expected to see an uptick on account of improving technologies for evacuation and competitive prices for gas from difficult areas, said Rawat.
“If you look at ONGC right now, we are 50:50 on oil and gas with respect to total production because we convert the gas into oil equivalent. Now, we are trying to monetise even the stranded gas discoveries. Initially, because of the low gas prices that we used to get, a lot of discoveries remained unmonetised because they were sub-commercial. Within ONGC, what I see is that we are going to increase the contribution of gas because we are getting more gas discoveries and because the prices are right or can improve for the ultra-deepwater (wells),” said Rawat.
Gas versus oil
“We are going to take up gas discoveries into production or development. So, the percentage of gas will definitely increase in the kitty compared to oil. Another thing is, gas all over the world is being considered as the transition fuel. So there has been a lot of emphasis on gas, and technologies for gas evacuation have also been improving,” she added.
To support domestic production from difficult areas, the government on October 1 hiked gas prices from deep-sea and high-pressure, high-temperature (HPTP) areas for the next six months. The price has been raised to $10.16 per mmBtu (million metric British thermal units) for the six months starting October 2024 from $9.87 per mmBtu during April-September, according to an official notification. The higher price realisation helps upstream players improve exploration activities.
India’s top exploration company has been struggling to ramp up oil and gas production from its fields significantly due to lack of new discoveries and declining production from oil fields.
In the quarter ended September 30, ONGC reported a decline of 2.1 percent in its gas production from last year. The company was able to reverse the declining trend in crude oil production as production during the July- September period grew by 0.7 percent on a year-on-year basis.
Stepping on the gas
In 2024, ONGC made two significant natural gas discoveries in its Mahanadi deepwater block in the Bay of Bengal. The state-run hydrocarbon explorer made the discoveries in the MN-DWHP-2018/1 block, which it had won in the third round of auction under the open acreage licensing policy (OALP) in 2019.
Rawat said ONGC would submit a field development plan for the gas discovery in its Mahanadi block to the Directorate General of Hydrocarbons (DGH) this fiscal.
“Currently, we are preparing the field development plan for Mahanadi. We have got acreages in OALP-9 and then we have the mega round of OALP coming up next, which is dominantly offshore. So we would be getting acreages and then we will be going for exploration in those areas. We know the depositional systems which can entrap oil or gas, so we are upbeat about Mahanadi and we are looking forward to having a field development plan by the end of this year (FY25) and submit it to DGH," Rawat said, adding that the DGH would assess the entire process to review whether the project would be commercially viable or not.
The company also notified DGH about one new pool discovery in ONGC’s ultra-deepwater area of Cauvery Offshore. Rawat said the discovery, which is predominantly gas, is ultra-deepwater and would therefore require very specific technologies for monetising because of hydrate formation, the depth of the water and lower temperatures at the seabed.
ONGC’s head of exploration said monetising the new gas discoveries would take about three to four years as the company would need to assess the data and plan necessary infrastructure requirements.
“It (monetising) will depend on how fast you go about it. Of course, FDP (field development plan) takes some time because you really have to look into the future, assess the whole data and also sort of predict how long the volume is going to last. Sometimes it requires additional wells, appraisal wells. Like for Manadi, we are going for FDP, appraisal wells, then we would do the infrastructure planning. So I think the fastest would be three to four years,” she said.
India's bet on natural gas
As India eyes reaching its net-zero emissions target by 2070, the country aims to increase the share of natural gas in its primary energy mix to 15 percent by 2030 from the existing level of around 6-7 percent.
Domestic consumption of gas is on the rise amid the government’s push for reforms and improving infrastructure. Oil ministry data showed that the cumulative gas consumption was higher by 11.9 percent at 36,850 million standard cubic metres per day (mscmd) for the current financial year till September.
However, domestic gas production significantly lags in consumption. The cumulative gross production of natural gas grew by mere 1.6 percent to 18,160 mscmd for the current financial year till September 2024 from last year.
This mismatch in country’s production and consumption has resulted in higher import dependency. In the current fiscal till September, liquefied natural gas imports were higher by 23.1 percent than over the same period last year.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
