Oil and Natural Gas Corporation (ONGC) on Thursday asserted that at the current sale price of natural gas it was not feasible to produce gas from its Krishna-Godavari basin block.
ONGC, which has made 10 gas finds in a block adjacent to Reliance Industries' prolific KG-D6 block, off the Andhra Pradesh coast, wants over $7 per million British thermal unit (mBtu) as gas price.
“I am categorically stating that the current price level is not viable to make investments,'' ONGC Chairman and Managing Director R. S. Sharma told reporters here.
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The government has fixed $4.20 per mBtu as the sale price of gas from the RIL's KG-DWN-98/3 or KG-D/ block for five years. The rate, which is now being considered the benchmark rate, is lower than $5.7 per mBtu that the gas from the BG-led Panna/Mukta and Tapti fields command. “This is not a viable price for making future investments,'' he said. ONGC plans to begin gas production from the KG-DWN-98/2 block in 2015-16, later than previously anticipated 2013.
Mr. Sharma said 20-25 million standard cubic metres a day of peak output was envisaged from the ONGC's KG block. When asked what price level would be comfortable, he said something certainly higher than the current rate but lower than LNG import price of over $9 per mBtu.
ONGC is planning to invest a minimum of $5.3 billion in developing gas finds in two of its eastern offshore Krishna Godavari basin blocks to produce 25 million standard cubic metres a day of gas.
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ONGC is also in talks with oil majors like ExxonMobil to replace Norway's Statoil and Petrobras of Brazil which have decided to quit its KG basin gas block.