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ONGC has approached the Ministry of Petroleum & Natural Gas to allow gas produced from tight reservoirs to be sold on par with that from other ‘difficult’ discoveries.
“We ecently found gas deposits in a block in the Vindhyan basin in Madhya Pradesh. It is a tight gas reservoir and it is not commercially feasible to develop this asset at the present gas price,” an ONGC official told BusinessLine .
The Ministry has fixed the gas price for the October 1, 2018 - March 31, 2019 period at $3.36 a unit (gas is measured in million British thermal units, or mBtu). But for gas produced from ‘difficult’ discoveries, such as those in deep water, ultra deepwater and high pressure/high temperature areas, a price of $7.67/mBtu is allowed.
“We want gas discoveries from tight gas reservoirs to be categorised with other difficult discoveries. We have already made presentations to the Ministry of Petroleum,” the official said.
A reservoir is considered ‘tight’ if the oil or gas is covered by harder rocks that require more expensive drilling and extraction techniques.
Gas price is governed by the New Domestic Gas Policy, 2014, under which the Centre fixes the price twice a financial year — for April-September and October-March.
Allowing tight gas reservoirs to get a higher price will require the Union Cabinet’s nod, the official added.
At present, ONGC annually produces 32.65 billion cubic metres of natural gas. Of this, 3 million standard cubic metre a day of production comes from the ONGC S1 Vasishta project in the Eastern Offshore. This is ONGC’s only project that is getting a higher price. “Going forward, we plan to increase production from Vasishta S1 to 4 million standard cubic metres a day,” said ONGC Chairman Shashi Shanker.
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