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HOEC buoyed by shallow-water well tests
PROJECTS & COMPANIES
HINDUSTAN Oil Exploration Co. (HOEC) has announced a successful production test at its second well in shallow-water Block MB/OSDSF/ B80/2016 (B-80) off India’s west coast.
The company said on April 29 that the D-1 well’s flow tests were conducted at var- ying chokes during a 36-hour period and had produced between 6,998 and 7,389 barrels of oil equivalent per day (boepd). The company said the results, coupled with those from its first well, D-2, had boosted the acreage’s production potential by 60% to 8,000 boepd.
“Having secured the two subsea wells ready to flow, our next task is to optimise the total cost of evacuation of oil and to reduce the break- even price (BEP) further down from our earlier guided level of $35 per barrel with appropriate return [on] the investment,” HOEC manag- ing director P Elango said in the company’s statement.
PTI quoted the executive as saying separately that the company had managed to cut its daily operating costs to around $50,000.
The company has already invested $45mn in the 56-square km block’s development, which it operates with a 50% stake. Adbhoot Estates owns theother50%.
“We plan to leverage the low-price environ- ment in [the] oilfield services sector to bring down the overall costs. We are determined to continue the momentum and complete the project to deliver the first oil and gas from both the wells as and when the current situation improves,” the executive told the local newswire.
In addition to the successful well test, the company said it had encountered oil and gas shows in 6-metre interval in the Deccan Trap formation. While the interval still needs to be tested, the company said it “would add value to the block”.
Construction of a mobile offshore processing unit (MOPU) has been completed in the Middle East, and Elango said the unit was ready to sail elsewhere. Once installed on the block, the unit will begin exporting oil to a 900,000 barrel floating storage and offloading (FSO) vessel and gas to the Gujarat market via state-run Oil and Natural Gas Corp.’s (ONGC) existing pipeline network.
Elango added: “Under the terms of the rev- enue-sharing contract (RSC), the oil and gas produced from this block enjoys marketing and pricing freedom and is expected to fetch a premium price in the growing gas market in Gujarat, partly being met by imported liquified naturalgas[LNG]”.™
India’s LNG imports soared in March
PERFORMANCE
INDIA’S imports of liquefied natural gas (LNG) soared 20.4% year on year in March to 2.87bn cubic metres, while production shrank by 14.4% to 2.41 bcm.
Imports for fiscal 2019-2020 climbed by 17.2% on the year to 33.68 bcm, according to Petroleum Planning and Analysis Cell data pub- lished on April 28. Production for the 12 months slid 5% to 31.18 bcm,
Gas production has reportedly suffered after the country entered lockdown on March 24, with industrial users and retailers understood to have reduced purchases.
Indian newswire PTI said earlier this month that a growing number of state-run Oil and Nat- ural Gas Corp. (ONGC) and GAIL (India)’s cli- ents had asked for supplies either to be reduced or suspended completely. Industry sources told the newswire that ONGC’s sales had dropped from 50mn cubic metres per day to 40 mcm since the start of the lockdown, while GAIL’s sales had plunged from 115-120 mcm per day to 76 mcm per day.
Indian Prime Minister Narendra Modi is set to review the country’s quarantine meas- ures on May 3, after its original deadline
was extended from April 14. The business community has begun pressing New Delhi to ease restrictions, and the government has softened some of its measures. For example, the government has cleared the way for state authorities to begin overseeing interstate travel by those looking to return their pri- mary residences.
The Ministry of Home Affairs has said move- ment between states will be regulated by local officials, who will need to conduct screening at both ends of the journey and enforce quaran- tines where necessary.
Energy consultancy Wood Mackenzie said on April 14 that the government’s decision to extend the lockdown had hurt demand and that the outlook for LNG demand was weak.
Wood Mackenzie’s Asia-Pacific vice-chair, Gavin Thompson, said: “India’s gas demand has been severely affected, primarily across the transport and industrial sectors. As a notoriously price-sensitive market, low oil prices are also a competitive threat to gas. High inventories are resulting in refiners further reducing margins for oil products to compete with gas, leading to downside risk on the LNG demand outlook.”™
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