Hardeep Singh Puri, India’s Union Minister for Petroleum and Natural Gas, announced on Monday the commencement of oil extraction from the Krishna Godavari basin, located offshore the eastern coast of the nation. This significant milestone was achieved by the state-controlled Oil and Natural Gas Corporation (ONGC) at its flagship deep-water project in the KG-DWN-98/2 Block.
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Addressing the nation, Minister Puri expressed his enthusiasm, stating that the extraction marked the initiation of “First Oil” production from the challenging deepwater project. This key project, situated off the coast of the Bay of Bengal, aims to tap into the deepest frontiers of the Krishna Godavari basin.
In a video released by the news agency ANI, Minister Puri revealed that the first oil was successfully extracted 30 kilometres off the coast of Kakinada in the Krishna Godavari Basin.
He shared insights into the project’s timeline, mentioning that the work had commenced in the fiscal year 2016-17. Despite encountering delays due to the COVID-19 pandemic, Puri expressed confidence, stating, “Out of the 26 wells there, four wells are already operational.”
Highlighting the anticipated growth in energy production, Minister Puri disclosed, “By May and June, we hope to be able to produce 45,000 barrels per day, contributing 7 per cent to our total crude oil production and 7 per cent to our gas production.” This boost is expected to make a substantial contribution to India’s goal of an energy ‘Aatmanirbhar Bharat.’
The project is projected to add seven per cent to the current national oil production and seven per cent to national natural gas production. Puri emphasized the significance of this achievement in propelling India towards self-reliance in the energy sector.
Market Response: ONGC Share Prices Surge
The market response to this achievement was evident as shares of the state-run Oil and Natural Gas Corp (ONGC) traded over a per cent higher, reaching a new 52-week high of Rs 220. This development is expected to bolster ONGC’s overall oil and gas output by 11 per cent and 15 per cent, respectively.
As the remaining oil and gas fields of the block are projected to become operational by mid-2024, the peak production of the field is estimated to be 45,000 barrels of oil per day and over 10 million metric standard cubic meters per day of gas.
In support of the announcement, the Oil and Natural Gas Corporation shared a social media post stating, “ONGC commenced its ‘First Oil flow to FPSO’ from Krishna Godavari Deep-Water Block 98/2 (in the Bay of Bengal) on January 7, nearing completion of Phase-2 of the project. Phase-3, leading to peak Oil and Gas production, is already underway and likely to be over in June 2024.”
This project, identified as the country’s first crude find in the Krishna Godavari Deep-Water Block 98/2, holds strategic importance. The location, 30 kilometres off the coast of Kakinada, signifies a crucial step in unlocking the potential of the Bay of Bengal for oil extraction.
Despite facing challenges, Minister Puri expressed his satisfaction, stating, “I’m happy to let everyone know that yesterday marked the extraction of the first oil (by ONGC).” He reiterated the timeline of the project, which commenced in 2016 and faced setbacks due to the pandemic.
