DK Sarraf confident of gas price rebound

Vol 19, PW 10 (28 Jan 16) News in Brief

ONGC chairman DK Sarraf is confident oil and gas prices will rebound by 2018 at which point the company should complete development work for the Vashishta and S1 deepwater gas fields off the east coast.

“It will take us around two years to develop the field,” Sarraf tells this report “We are hoping prices will bounce back.” ONGC awarded a Rs2450cr ($366m) offshore contract to a consortium of McDermott and L&T Hydrocarbon Engineering on December 1 to develop Vashishta and S1.

Many were wondering if this was wise as the price of oil is near the $30/barrel mark and gas prices are sliding too – these projects are projected to be commercially viable only at $6.80/mmbtu from 2020-21. But Sarraf reminds us service and rig costs have also fallen 50% so the company is saving money.

Vashishta was discovered in 2005 with 9.56bcm of gas reserves. The field produced at a rate of 3.55m cm/d for five years before declining.