ONGC seeks commercial help from government for $6 billion KG basin project

ONGC seeks commercial help from government for $6 billion KG basin project

The state run Oil and Natural Gas Corporation Ltd (ONGC) may seek government support for its KG basin water project due to fluctuating oil prices, according to an ET report.

The oil major company is planning to appeal for commercial support from the government for its $6 billion deep water project at the current oil prices, which have more than halved in a year to about $45 a barrel. 

Reportedly, the company is also working on revamping its field development plan to cut capital spending and boost output. They aim to cut down oil production cost by $10 from $60 a barrel. 

Apart from the oil, as per the recently submitted field development plan report, the company also aims to bring down gas production cost by $1-2 from $6-7 a unit. 

Currently, the company is under governmental pressure due to Prime Minister’s vision to shrink India’s crude oil import by 10% in seven years from nearly 80% now, stated the ET report.

As per the recently released Standard & Poor’s Ratings Services data, domestic gas producers Oil India Ltd and ONGC could face a revenue decline of Rs 120-130 crore and Rs 1,080-1,150 crore respectively, on gas sales during second half of 2015-16 fiscal. 

“Globally, several E&P companies have scaled back spending and put new exploration projects on hold amid low hydrocarbon prices,” it said.

Low gas prices could materially reduce profitability of ONGC’s KG-basin gas discoveries.

Share Button