In Oil & Companies News 12/05/2015
India is expected to see a turnaround in its declining gas output over the next six years with production expected to jump by almost 80 per cent from around 92 metric million standard cubic metre per day (mmscmd) to 160 mmscmd.
The petroleum and natural gas ministry informed the prime minister’s office (PMO) at a review meeting on April 28 that the bulk of this incremental gas output would come from the fields owned by two public sector energy explorers — ONGC and Oil India (OIL).
Reliance Industries, too, is expected to moderately raise production from its KG-D6 block, the most prolific gas discovery made in the country. Gas output from KG-D6 fell to about 11.5 mmscmd in the March quarter from a peak of 69.43 mmscmd reached in March 2010.
The PMO review covered various infrastructure sectors as the government seeks to remove bottlenecks to accelerate growth.
“The optimism on gas output is based on field development plans prepared by companies and approved by the government. These show the readiness of the fields to produce and indicate definitive growth,” said a petroleum ministry official privy to the review.
Increased gas output can have a positive impact on about 24,000 mw of gas-based power plants that are running at less-than-half their capacity owing to dearth of domestically-produced natural gas. Apart from meeting power demand, fuel availability to these plants can protect investments worth Rs 60,000 crore, which are at risk of turning non-performing assets (NPAs).
Higher gas output can help the government reduce subsidy burden on fertiliser, as cheaper domestic gas would help producers avoid going for expensive re-gasified liquefied natural gas (R-LNG).
According to sources, the PMO review meeting was held amid concerns about falling gas output from KG-D6 fields, quite a few of which are owned by RIL and British Petroleum (BP).
Sources said cabinet secretary Ajit Seth and principal secretary in the PMO Nripendra Misra, who conducted the meeting, mainly reviewed the production plans of the ready-to-produce gas fields.
Gas fields that are ready to start production include ONGC’s Daman offshore block, G1 field and KG-98/2 block, as well as its C-26 cluster. OIL’s NELP blocks in the northeastern region and KG basin are also expected to ramp up production, the meeting was told.
RIL and BP are also learnt to have presented a list of blocks to the PMO officials, which they hope would enhance gas output over the next five years.
RIL proposes to invest over $4.5 billion along with its partner BP over the next few years to produce 20 mmscmd of gas from the R-Series discoveries in the KG-D6 block and another 10 mmscmd from its four satellite fields.
Production from its D1, D3 and MA fields are also expected to rise after falling over the next two years. RIL is engaged in arbitration with the government for cost recovery from these fields.
Ministry officials projected that gas production may rise even over the projected output of 160 mmscmd by 2021 if some more gas fields are discovered and their FDPs are approved on time.
