ONGC to invest Rs 138 Bn in new projects

13 Aug 2024 CW Team

In a strategic move to enhance the production of natural gas, the Ministry of Petroleum and Natural Gas (MOP&NG) has notified a revised pricing policy that will see natural gas from new wells or well interventions in nominated fields of ONGC and Oil India Limited being priced at a 20% premium over the administered price mechanism (APM). This effectively sets the price at 12 %of the Indian Crude basket price.

Under this new guideline, the Petroleum Planning and Analysis Cell (PPAC) has outlined that the APM Price was previously pegged at 10 %of the Indian Crude basket price on a monthly basis. The implementation of this premium pricing is anticipated to render gas development projects in challenging areas viable, areas which are often capital and technology-intensive.

ONGC has responded to this policy update by approving two major projects totaling an investment of approximately Rs 138 billion. The first, the Daman Upside Development project in the Mumbai High field, involves a cost of about Rs 78 billion and is already underway. It is expected to reach a peak production of around 5 million standard cubic meters per day (MMSCMD).

Furthermore, the ONGC Board has sanctioned the Integrated Development of 4 Contract areas under the Discovered Small Fields (DSF-II) at an estimated project cost of Rs 60 billion. This project also benefits from pricing and marketing freedom under the DSF Policy and aims to hit a peak production of approximately 4 MMSCMD. The execution of this project has already been initiated. This policy shift aligns with India's ambitious target of increasing the share of natural gas in the national energy mix from the current 6 %to 15 %by the year 2030, supporting the country's broader energy and environmental goals.

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