ONGC boosts India’s energy production with first oil from $5 billion deep-sea project

India’s state-controlled Oil and Natural Gas Corporation (ONGC) has started oil extraction from the country’s newest deep-water oil discovery in the Bay of Bengal, adding a fresh impetus to energy production in the world’s fastest-growing large economy, according to India’s Minister for Petroleum and Natural Gas, Hardeep Singh Puri.

ONGC’s Krishna Godavari Deep-Water Block 98/2 is located offshore India’s eastern coast, about 30km from the Kakinada coast, and the production starts at a time when India’s primary energy consumption is poised to more than doubles by 2050.

“’First Oil’ production commences from the complex & difficult deepwater KG-DWN-98/2 Block, situated off the coast of Bay of Bengal. Production is expected to be 45,000 barrels per day & over 10 million cubic metres of gas per day, contributing towards an energy #AatmanirbharBharat [self-sufficient India], Puri said on X.

“This project is expected to add 7% to current national oil production & 7% to national Natural Gas production,” the minister added.

Confirming that “first oil” from the KG-DWN-98/2 block has flowed on January 7, ONGC said in a statement that the commencement of production from its flagship $5-billion deep-sea project in the Krishna Godavari basin will help reverse years of decline in output.

During the financial year 2023, ONGC has produced 18.4 million tonnes of crude oil and about 20 billion cubic metres per day of gas. The third phase of the 98/2 project is already underway and is expected to be completed in June this year. The project is likely to increase ONGC’s total Oil and Gas production by 11% and 15% respectively, the public sector unit said.

Tackling waxy crude

According to ONGC, the development of the project and its success hinged on navigating challenges posed by the crude’s waxy nature. ONGC employed a novel pipe-in-pipe technology, a first in India, to address these issues, the company said. The bulk of the fabrication work was carried out at the Modular Fabrication Facility in Kattupalli, Tamil Nadu, it said.

With water depths ranging from 300-3,200 metres, the discoveries in the Krishna Godavari Deep-Water Block 98/2 are divided into Cluster-1, 2 and 3, with Cluster-2 originally scheduled to commence the first production in 2021.

India is likely to account for 25% of global energy demand growth over the next two decades, as well as around 14% of the global primary energy consumption by 2050. The country is currently the world’s third largest consumer of oil and LPG, as well as the fourth largest LNG importer and refiner.

According to bp’s Energy Outlook for India, all scenarios envisage more than 100% growth in primary energy by 2050 across the country.

Future of energy demand

In an interview with Energy Connects during India Energy Week last year, Hardeep Singh Puri had highlighted why the energy sector represents one of the most critical components of India’s growth as well the future of energy demand.

“India’s economic growth is three times that of global growth, and a major part of energy demand in future will be from India. That’s why we have taken bold and decisive steps across the sector – in exploration, production, biofuels, refinery, green hydrogen and more. This includes making India an investment-friendly destination in exploration and production, and energy infrastructure, and moving energy manufacturing centres to India. Reducing ‘No Go’ areas for energy exploration by almost 99%, and providing easy access to data through the National Data Repository (NDR) and Hydrocarbon Resource Assessment (HRA) projects, are examples of the government’s relentless focus to develop the sector,” the minister said.