Page 4 - AsianOil Week 07 2021

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ONGC sets KG-D5 peak production target

PROJECTS & INDIA’S state-owned Oil and Natural Gas Corp.
COMPANIES (ONGC) intends to reach peak production at its
deepwater KG-DWN-98/2 (KG-D5) block in the
Krishna Godavari (KG) Basin within the next
three years.
The developer will increase the block’s pro-
duction to 3-3.5mn cubic metres per day from
May, ONGC head of finance Subhash Kumar
told Reuters on February 15. He added that out- (IGX), for an undisclosed sum. The major noted
put would then expand to 8.5 mcm per day in that it would invest in IGX in order to be able to
financial year 2022-2023 before peaking at 15 affect the development of the country’s gas sec-
mcm per day in 2024. tor, as well as realise “maximum value from its
The target is part of ONGC’s wider push to gas marketing efforts”.
deliver on the government’s goal of expanding Despite the company’s optimism, there are
gas’ share of the energy mix to 15% by 2030 from still a major hurdle to overcome before its gas
just over 6% at present. business can hope to become independently
ONGC revealed on February 13 that it viable – gas price caps.
planned to set up a subsidiary to handle all of ONGC has repeatedly called on the gov-
its piped gas and liquefied natural gas (LNG) ernment to deregulate gas prices, noting that
interests. In its quarterly results statement, the current pricing mechanism does not reflect
ONGC said it would create the unit to source, the fair value of locally produced gas – a point
market and trade of natural gas, LNG and hydro- Kumar revisited this week when he highlighted
gen-enriched CNG (HCNG). The unit will also the company’s production costs as being around
be responsible for the major’s gas to power and double current price caps.
biofuels businesses. The government cut the price of the state
Kumar said the subsidiary would bid for companies’ conventional gas production for
ONGC’s gas production on behalf of the group’s the six months from October 1, 2020 to $1.79
downstream facilities. He said: “As far as coming per mmBtu ($49.51 per 1,000 cubic metres)
years are concerned the story of gas is going to from $2.39 per mmBtu ($66.11 per 1,000 cubic
unfold, which is going to be critical for the sus- metres) in the previous six-month period.
tained positive performance of the company.” Kumar said production costs were around $3.5-
ONGC also unveiled plans on February 13 $3.7 per mmBtu ($96.81-102.34 per 1,000 cubic
to buy a 5% stake in the Indian Gas Exchange metres).™

Iraq in talks to build crude

storage in China, Pakistan

POLICY IRAQI Oil Minister Ihsan Abdul Jabbar this government companies over building jointly
week said that the country was in advanced dis- managed oil depots.”
cussions with Chinese NOCs to build oil stor- Currently, around 70% of Iraq’s crude exports
age facilities in the Middle Eastern country as it are sold to Asian countries, with China and India
seeks to increase sales in the region. accounting for a combined 90% of this figure.
Speaking to Reuters, Abdul Jabbar said that The move is seen as an important step in
while the talks had reached an advanced stage increasing Iraq’s flexibility of supply to key Asian
with the Chinese entities, Baghdad is also “dis- markets and to developing its trading capabili-
cussing plans proposed by Pakistan for building ties, particularly as it spreads exports across its
crude oil storage facilities” there. He added that Basrah Heavy, Light and new Medium crude
there were plans to build storage capacity else- grades. Sources from the country’s state oil mar-
where in Asia to “serve Iraq’s interests in mar- keter SOMO were quoted by S&P Global Platts
keting its oil.” Pakistan is seen as a key growth last week as saying that January exports of Bas-
market for Basrah crude grades. rah Medium equated to 891,000 barrels per day
Meanwhile, he told Shafaq News Agency (bpd) in January following its launch, amounting
that serious discussions were ongoing “with a to around 32% of the total.
Chinese private company and other Chinese Meanwhile, Basrah Light accounted for 40%

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