ONGC looks forward to its gas output striking a 5-year high in FY18

Oil and Natural Gas Corp (ONGC) anticipates its natural gas production to attain a 5-year high in the current financial year, resulting in the starting in of a long-delayed project in the Arabian Sea.

State-owned Oil and Natural Gas Corp, which accounts for about two third of India’s total natural gas production, is expected to produce close to 25 billion cubic meters of gas in the FY 2018.

The forecast compares with 23.5 billion cubic meters in the financial year to end March 2017, representing projected growth of about 6%.

Higher output from India’s top producer would help the country meet Prime Minister Narendra Modi’s target of reducing hydrocarbon imports by 10% by 2022. India currently imports 70-75 per cent of its energy needs. While gas makes up only 8 per cent of the total energy consumed, almost 40% of it is imported.

India prices its gas almost 60% below the imported natural gas, so added cheap domestic gas could also bring down the cost of running stuck power plants and ailing steel mills that accounts for the largest chunk of India’s soured loans.

“The Daman project is back on track. The gas from the phase I of Daman will be out by April end or first week of May. The project should contribute almost 2 to 3 million metric standard cubic meters per day (mmscmd) of gas from May onwards,” said ONGC’s Director – Offshore, TK Sengupta.

ONGC is backing on the Daman offshore project to escalate its natural gas output, which has been basically stagnant over the past decade. The project hit interruptions last year after its contractor, Singapore-based Swiber Holdings, ran into financial difficulties.

“We had handed over the Phase 1 work for the project to the sub-contractors who are now completing it for us. The project is eight months delayed,” Sengupta said earlier.

Phase 2 will be completed by May 2018 when it will add another 3 mmscmd to the company’s production. It will eventually be ramped up to 8 mmscmd by 2020, he said.