ONGC confirms delays in oil block next to RIL’s KG D6

State-owned oil producer ONGC said it may not be able to keep up with the development schedule of its offshore oil block next to Reliance Industries’ KG D6, but said it was too early to ascertain the exact quantum of delay.

The KG-DWN- 98/2 offshore block was supposed to see an investment of $5.1 bln (Rs 33,000 cr) to ensure gas production from June 2019, reported Bloomberg, but the project has been delayed by at least a year.

ONGC said it is facing delays in awarding contracts to private companies as part of the development project.

The delays, it said, are due to the “introduction of various new policies concerning the oil mining sector.” The company did not clarify whether it was referring to its own new policies or that of the government.

ONGC, being a government company, has to fulfill many criteria before awarding mega contracts to private contractors.

“Subsequent to the approval of the (FDP) field development plan (on 31.03.2016), ONGC initiated activities for procurement of goods and services required to execute the plan envisaged in the FDP such as drilling, completion of wells, creation of production and processing facilities (in both offshore and onshore) , transportation pipelines etc.

“Meanwhile, introduction of various new policies concerning the oil mining sector led to deferment of tendering activities,” it said.

It said it has not redrawn its schedule to develop the field, which lies adjacent to the troubled KG DWN 98/3 (KG D6) block of Reliance Industries.

“As of now, the project schedules are being maintained as planned. However, due to very complex nature of the project, there may be a possibility that the schedules may get exhausted which will only be known at a later date,” it said. “Delay in execution, if any, is not ascertainable precisely as of now..”

It also said there was “no material impact” on the company “as such”.

“Despite changes in policies concerning the oil mining sector, the company is making efforts to execute the projects at the earliest possible time,” it added.

The Krishna Godavari basin in the Bay of Bengal has proven to be a tricky area for large-scale development, as Reliance Industries has learnt. RIL was supposed to produce as much as 100 million cubic meters of gas per day from its KG D6 basin, but production is below 5 MMSCMD at present.

ONGC’s 98/2 block has been in the news after it alleged that a lot of gas has migrated to RIL’s adjoining 98/3 block as RIL started production. The value of the gas was estimated at around $1.55 billionĀ  by the oil ministry.