India’s national oil company, ONGC, won this 9,800 sq km block that lies in the deep waters of Krishna-Godavari basin in Bay of Bengal, back in 1999. It has since sunk 1.3 billion dollars into it, found oil and gas, but has produced nothing.

Rankled by this show when rival companies are making a splash in the basin, ONGC has roped in international consultants, Boston Consulting Group, to “handhold” it. And hence, things have begun moving now.

Welcome to a ‘mini-Bombay High’ in India’s eastern seas!

The block, KG-DWN-98/2, is estimated to hold 500 million tonnes of oil and oil equivalent gas—100 m t of oil and 445 billion cubic metres or 1.33 trillion cubic feet of gas—which is ten times as much as the other large field on the East coast, Ravva, holds.

ONGC’s former Director-Exploration, Narendra Kumar Verma, (who has just taken over as the Managing Director of ONGC’s subsidiary, OVL) vehemently denied that the delay in tapping the block has anything to do with the gas price revision. Earlier, he said, ONGC had supposed there was only gas. But recently the company discovered oil, moving the block up the priority list.

Boston Consulting (BCG) will help keep tight control over timelines and costs. ONGC hopes that BCG’s ‘stage-gate’ process, which divides project work into sequential elements with fixed responsibilities will help the company get KG-DWN-98/2 into production in quick time, at least now.

It is high time the block is tapped into. So far, four oil and seven gas discoveries have been made in the block, and yet there has been no production.

“In deep-waters, the experience of private players would serve as a lesson to ONGC,” the company’s Director-Offshore, T K Sengupta, is quoted in an in-house publication of ONGC, which also described the block as a “peer pressure irritant”.

Now, ONGC plans to sink big bucks into the project—of the order of $ 9 billion, over time.

Incidentally, the block was won by a consortium comprising ONGC, Cairn Energy and Norway’s Statoil. At one point, such was the level of international interest in the block that companies like Brazil’s Petrobras hoped to pick up stakes in the block. But execution delays have caused all of them to drop out. Cairn and Statoil are in the process of selling back their stakes to ONGC.

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