India's ONGC sees its gas output hitting 5-yr high in fiscal 2018 - sources

Swiber Holdings

07/04/2017 06:56

By Promit Mukherjee 
    MUMBAI, April 7 (Reuters) - India's Oil and Natural Gas Corp 
 ONGC.NS  expects its natural gas production to reach a 5-year 
high in the current fiscal year following the start-up in coming 
weeks of a long-delayed project in the Arabian Sea, two senior 
company executives said. 
    State-owned ONGC, which accounts for about two-thirds of 
India's total natural gas production, is likely to produce close 
to 25 billion cubic metres (bcm) of gas in fiscal 2018, the 
executives told Reuters. 
    The forecast compares with 23.5 bcm in the fiscal year to 
end March 2017, one of the executives said, representing 
expected growth of about six percent. The two asked not to be 
named as the figures have not been released by the company. 
    Higher output from India's top producer would help the 
country meet Prime Minister Narendra Modi's target of reducing 
hydrocarbon imports by 10 percent by 2022. India currently 
imports 70-75 percent of its energy needs. While gas makes up 
only 8 percent of the total energy consumed, almost 40 percent 
of it is imported.  urn:newsml:reuters.com:*:nL3N1BL2E2   
    India prices its gas almost 60 percent below imported 
natural gas, so more cheap domestic gas could also bring down 
the cost of running stranded power plants and ailing steel mills 
that account for the biggest chunk of India's soured loans. 
    "The Daman project is back on track ... The gas from the 
phase I of Daman will be out by April end or first week of May," 
ONGC's Director - Offshore, TK Sengupta, told media on Tuesday. 
    The project should contribute almost 2 to 3 million metric 
standard cubic metres per day (mmscmd) of gas from May onward, 
he said. 
    "ONGC is facing a natural decline of output from its fields 
so the net impact of additional production is not very high. 
Having said that, I think ONGC is on track to consistently 
report increases in production in the coming years," said Dhaval 
Joshi, analyst with brokerage Emkay Global Financial Services. 
    ONGC is banking on the Daman offshore project to increase 
its natural gas output, which has been largely stagnant over the 
past decade. The project hit delays last year after its 
contractor, Singapore-based Swiber Holdings  SWBR.SI , ran into 
financial difficulties. 
    "We had handed over the Phase 1 work for the project to the 
sub-contractors who are now completing it for us. The project is 
eight months delayed," Sengupta said earlier this week. 
    Phase 2 will be completed by May 2018 when it will add 
another 3 mmscmd to the company's production. It will eventually 
be ramped up to 8 mmscmd by 2020, he said. 
     
 
 (Reporting by Promit Mukherjee; Editing by Euan Rocha and 
Richard Pullin) 
 ((promit.mukherjee@thomsonreuters.com; +91-22-6180-7516; 
Reuters Messaging: 
promit.mukherjee.thomsonreuters.com@reuters.net)) 
 
Keywords: ONGC GAS/OUTLOOK