ONGC cuts 98/2 development spend to $4.8bn
ONGC directors are preparing to approve a scaled down Field Development Plan (FDP) for the KG-DWN-98/2 offshore block - encouraged by a new government policy that allows operators to sell deepwater gas at commercially viable market prices.
ONGC's Board was scheduled to discuss the FDP when it met on March 10 but dropped the idea at the last minute because the project economics are yet to be finalised. However company sources say this was lucky: on the same evening the Cabinet Committee on Economic Affairs chaired by Narendra Modi approved a long overdue proposal to let operators benchmark gas produced from deepwater, ultra-deepwater and HP/HT reservoirs against the landed price of imported fuel, coal, naphtha or LNG, whichever is lowest.
"The project is economically viable now," DK Sarraf, ONGC chairman, told PETROWATCH on March 11. Economically viable for ONGC certainly, but contractors can expect less business than before.
ONGC estimated the earlier project CAPEX at around Rs53,000cr ($7.9bn). "But the new plan will see investment of only $4.8bn," we hear.
"And we have reduced the number of development wells from 45 to 34. There will also be changes to the structural design of facilities to handle oil and gas." Under the original plan ONGC proposed facilities to handle 17m cm/d of gas and deployment of a 75,000 b/d capacity FPSO facility.