Mumbai : State-run explorer Oil and Natural Gas Corp (ONGC) is poised to finalise the field development plan of its Krishna Godavari basin KG-D5 fields at a time of declining gas output from the KG-D6 block in the eastern offshore operated by a Reliance Industries-led consortium.
ONGC chairman D.K. Sarraf told reporters here that the organisation was quite bullish that the KG-DWN-98/2 block should start production by mid-2018.
“The whole of the executive committee of ONGC went to Kakinada and reviewed the project. Many actions have been taken. It is a very challenging project. By 2021, we will get gas of 20 mmscmd (million metric standard cubic metres a day),” Sarraf said.
Apart from gas reserves, the field has large reserves of crude oil and is estimated to yield 70,000-90,000 barrels of oil per day.
“Our team says 90,000 barrels per day is some times being conservative,” he added.
The project is, however, yet to get the requisite approvals.
“It is yet to get the board approval, yet to get government approval, yet to get the Directorate-General of Hydrocarbons’ approval. But, technically, there is a proof concept that it can produce so much, it can produce that fast,” Sarraf said.
“Investment will be huge. This is cluster development. There are opportunities of putting other small, small blocks. If there is a shortfall in estimates, we can make up for that,” Sarraf said, speaking of the output possibilities of cluster development.
Presenting ONGC’s annual report for 2013-14 late last month, the chairman said that with the buoyancy in international crude prices and the strengthening of the company’s US Dollar-denominated revenues expected to continue, there is substantive near-term growth potential in earnings.
In 2013-14, ONGC registered its highest-ever revenue at Rs.842.01 billion, a growth of 1.1 percent from Rs.832.90 billion in the previous fiscal.
The company also posted a higher profit after tax of Rs.220.95 billion, up 5.6 percent from fiscal 2013, after sharing the highest ever under-recovery, or losses on selling below cost, of Rs.563.84 billion.
“With more remunerative pricing of our natural gas and with subsidy rationalization, significant value remains to be unlocked for your trusted shareholdings,” Sarraf said in the annual report
The company has proposed a dividend payment of 190 percent with payout ratio of 43.04 percent.