ONGC starts oil production from delayed USD 5 billion deep-water project

New Delhi: State-owned Oil and Natural Gas Corporation (ONGC) on Monday said it has started oil production from its much-delayed flagship deep-sea project in Krishna Godavari basin in Bay of Bengal, which will help reverse years of decline in output.
The ‘first oil’ from the deep-water KG-DWN-98/2 block in Bay of Bengal has flowed on January 7, the firm said in a statement.
Oil Minister Hardeep Singh Puri also announced the start of production in a post on X but neither he nor ONGC gave out the amount of oil being produced.
”This 98/2 project is likely to increase ONGC’s total oil and gas production by 11 per cent and 15 per cent respectively,” ONGC said in the statement.
ONGC produced 18.4 million tonnes of crude oil and about 20 billion cubic metres per day of gas in the 2022-23 fiscal year (April 2022 to March 2023).
Puri said the ”production is expected to be 45,000 barrels per day and over 10 million standard cubic metres per day of gas” from the Cluster-2 discoveries in the block. He however did not give the time lines for reaching those levels of output.
Last month in a written reply to a question in Rajya Sabha, Minister of State for Petroleum and Natural Gas Rameswar Teli had stated that ONGC will in May 2024 start commercial production of crude oil from the block.
The KG-DWN-98/2 or KG-D5 block, which sits next to Reliance Industries’ KG-D6 block in the KG basin, has a number of discoveries that have been clubbed into clusters. Located 35 kilometres off the coast of Andhra Pradesh in water depths ranging from 300-3,200 metres, the discoveries in the block are divided into Cluster-1, 2 and 3. Cluster 2 is being put to production first.
As per original plans, oil production from Cluster-2 should have begun by November 2021, but was delayed because of the Covid pandemic. Thereafter, ONGC set May 2023 as the first Cluster-2 oil production deadline but then extended it to August 2023 and thereafter extended the flow of first oil every month, with the last deadline announced being December 2023.
It went on to state that the development of this field faced unique technical challenges due to the waxy nature of the crude. The project, it said, is on track with final phase of project with the balance oil and gas fields of the block scheduled to be put on production by mid-2024.

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