Krishna Godavari Basin Poised For Hydrocarbon Renaissance As ONGC Set To Start Oil Production From Flagship Deep-Water Project

In 2024, the Krishna Godavari Basin, located off the coast of Andhra Pradesh, is poised to regain prominence in India's hydrocarbon sector as the state-owned oil and gas giant, ONGC, gears up to initiate oil production from its flagship deep-water project, KG-98/2 Development Project as reported by The Hindu Buisnessline.

While gas production began in March 2020, the plan is to further ramp up operations by May 2024.

Although the initial anticipation was for oil production to commence in December, sources indicate that technical issues are currently being addressed.

KG-DWN-98/2, situated adjacent to Reliance Industries-BP's KG-D6 block, comprises three clusters of discoveries—Cluster I, II, and III—with commercial production already underway in Cluster II's gas field since March 2020.

Crude oil production in Cluster II is scheduled for May 2024, with ONGC expressing confidence in an earlier start.

Responding to questions in the Rajya Sabha, Minister of State for Petroleum & Natural Gas Rameswar Teli stated that Cluster III includes an ultra-deepwater gas discovery, expected to be the world's second-deepest when monetised, with the field development plan (FDP) set to be submitted by January 2026.

Crude oil will be marketed on an arm's length basis, with all domestic refiners being prospective buyers.

The pricing of the crude oil will be linked to international benchmark crudes like Dated Brent based on prevailing market conditions.

ONGC plans to commence production from 3 to 4 wells initially, with an estimated initial production of 8,000 to 9,000 barrels per day.

The first oil consignment is slated for the subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL), while peak oil output is projected at 45,000 barrels per day.

The project, situated in challenging offshore geology, entails an estimated capital expenditure of $5.07 billion and operational expenditure of $5.12 billion over a field life of 16 years, according to ONGC.