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A GLIMPSE OF MARGINAL FIELDS & THEIR STATUS OF DEVELOPMENT Dr. M. K. Chakrabarti

A GLIMPSE OF MARGINAL FIELDS & THEIR STATUS OF DEVELOPMENT Dr. M. K. Chakrabarti. Oil & Natural Gas Corporation Ltd. MUMBAI, May 23, 2013 . Presentation overview. 1. Introduction. 2. Status of Marginal fields. 3. Status of In house Development. 4.

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A GLIMPSE OF MARGINAL FIELDS & THEIR STATUS OF DEVELOPMENT Dr. M. K. Chakrabarti

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  1. A GLIMPSE OF MARGINAL FIELDS & THEIR STATUS OF DEVELOPMENTDr. M. K. Chakrabarti

  2. Oil & Natural Gas Corporation Ltd. MUMBAI, May 23, 2013

  3. Presentation overview 1 Introduction 2 Status of Marginal fields 3 Status of In house Development 4 Status of Western Offshore fields 5 Conceptualized new Schemes 6 Status of Eastern Offshore Marginal fields 7 Status of Onshore fields 8 Development through Service Contract 9 Status of next phase of Outsourcing 10 Issues/ Concerns #2 E&P Company in the world

  4. INTRODUCTION • Marginal Field, a field that may not produce enough net income to make it worth developing at a given time; should technical or economicconditions change, such a field may become commercial. i.e, Sub-economic at current cost • A field may be categorized as marginal under following considerations: • Reservoir size (small volume) • Lack of infrastructure / technology • Inaccessibility to the area- remoteness • Fiscal policy • Market for gas • Cost of development MARGINAL FIELD – Definition Most valuable Indian PSU

  5. Status of Marginal Fields

  6. Status of Marginal Fields • Total Marginal Fields : 165 • Western Offshore : 58 • Eastern Offshore : 21 • Onshore : 86 6 Most valuable Indian PSU

  7. Category wise distribution of In-place Volume (%) 7 #2 E&P Company in the world

  8. Category wise Distribution of Ultimate Volume (%) 8 #2 E&P Company in the world

  9. DEVELOPMENT STRATEGIES • In house development • Clustering • Utilization of nearby in house facility • Sharing infrastructure of JV • Converting old rigs to MOPU • CAPEX & OPEX Optimization • Hiring of FPSO • Batch drilling • Concurrent exploration • Development through Service Contract 9 Most valuable Indian PSU

  10. Status of In-house Development

  11. Status of Offshore Marginal Fields Western Offshore Total fields : 58 Scheme made : 37 On production : 15 84.01 % of in-place is accounted for monetisation Eastern Offshore Total fields : 21 Scheme made : 2 On production : 3 10.84 % of in-place is accounted for monetisation 11 Most valuable Indian PSU

  12. Categorization of Offshore Marginal Fields 12 ONGC a Wealth Creator

  13. Fields/Clusters Under Monetisation #2 E&P Company in the world

  14. Strategy for Remaining Fields (Western Offshore) Total fields: 20 14 A FORTUNE Global 500 Company

  15. Conceptualised new schemes • C-24 additional development • Dahanu Development • Development of GK-28 & 42 new discoveries 15 # 21 Energy Company in the World

  16. Strategy for Eastern Offshore Fields Development • ERD wells are planned for monetization of some ultra shallow water MF • Being evaluated for cluster development of remaining MF and ND of shallow Water • Projects under implementation • G-1 & GS-15: GS-15 put on production • G-1 wells are under completion • Projects under appraisal • Vasishtha & S-1 : Appraisal completed in Vasishtha • : Appraisal wells under drilling in S-1 • KG-DWN-98/2 : 7 structures of DWN-98/2, along with GS-29-5 • and G-4 are being planned for hub development. • Under Appraisal presently • MANIK : GS-29-1 area & G-4-6 16 # 21 Energy Company in the World

  17. Status of Onshore Fields

  18. Basin-wise status of Onshore Fields Total fields: 86 18 A FORTUNE Global 500 Company

  19. Status of Onshore Marginal Fields Total fields : 86 Western Onland Total fields : 23 On production : 12 94.03 % of in-place Is accounted for monetization Eastern Onland Total fields : 63 On production : 32 90.38 % of in-place is accounted for monetization 19 Most valuable Indian PSU

  20. Category-wise distribution of In-place Volume (%) # 21 Energy Company in the World

  21. Fields being developed In-house (9nos) 21 ONGC a Wealth Creator

  22. Fields Under Delineation (10 nos) 22 A FORTUNE Global 500 Company

  23. Development throughService Contract

  24. Background • An approach paper was put up at 84th Board meeting, in Nov 2001 • 2nd strategy meet at Sariska in February 2002 deliberated marginal fields development • 3rd strategic meet in July 2002 – following strategic options were discussed • In-house development • Alliance with profit sharing with other E&P companies • Through service contract • 230th meeting held on 17th September 2002, EC decided that the fields be offered to the private companies in phases • In the Project and Planning committee meeting held on 22nd October 2002 at New Delhi, it was decided to first offer 19 onshore marginal fields

  25. Status of Development through Service Contract • 3 rounds of bidding took place (Offshore 1, Onshore 2) • Awarded 25 fields • 14 are terminated • 11 are under Service contract at present • Two fields are on production 25 # 21 Energy Company in the World

  26. Being Developed through Service Contract 26 # 21 Energy Company in the World

  27. Issues for Development through Service Contract • Cap on Crude Price ($ 18-35) • Gas Utilization & Marketing (Power Generation or CNG) • Gas Pricing • PML Grant • Essentiality Certificate • Extension of Assessment Period 27 # 21 Energy Company in the World

  28. Status of Next Phase of Outsourcing

  29. Background • In the first QPR of ONGC held on 09.08.2007 with DGH for development of Marginal fields, DGH was asked to suggest a mechanism to ONGC for outsourcing of marginal fields through bidding process in a more lucrative way. • In the 6th Business Strategy meet of ONGC held at Agra on 25-26 August 2007 the Ministry desired that marginal fields to be identified by both ONGC and DGH and based on comprehensive analyses a suitable business model could be developed for optimum usage. • DGH visited Mumbai from 5-7th September 2008 and data of 18 fields were examined • DGH presented the brief strategy for development of Marginal Fields to Additional Secretary, MoP&NG on 20th September 2007 wherein it was decided that a draft Marginal Field Policy (MFP) covering all aspects of Marginal Fields of NOCs be proposed. • During 3-5th October DGH team again visited Mumbai and data of another 81 fields were examined jointly. 29 # 21 Energy Company in the World 29

  30. Background (Contd.) • DGH / ONGC made presentations on 18.10.2007 and 11.12.2007 in meetings chaired by Additional Secretary, MoP&NG and it was desired that MFP may be evolved with the following salient features • Production Sharing contract • Freedom to market/ utilize gas • International Crude Price • Gas Price at arm’s length • Royalty- To be borne by contractor or ONGC • Cess – Whether to be exempted • Exemption of Customs Duty- modalities and relative merit • On the basis of deliberations in the meeting held on 21st February, 2008 a draft Marginal Field Policy was prepared by the committee • The MFP was deliberated in the meeting held on 08.05.2008, chaired by Additional Secretary, MoP&NG. It was decided that: • Adopt single rate of production sharing • With effect from 01.05.2008 if production does not commence within 5 years for onshore blocks and 7 years for offshore blocks, they would be considered for offer under MFP • No recovery of past cost incurred by NOCs. 30 # 21 Energy Company in the World 30

  31. Background (Contd.) • In the meeting dated 22.01.2009 chaired by Joint Secretary, MoP&NG, a committee was formed to prepare a model contract by 15.02.2009 after which new policy would be put up for approval. • Draft Model Contract was prepared and submitted to MoP&NG • Initially 22 Marginal Fields were identified with the option of offering other marginal fields as and when they are available. Subsequently it was decided to develop two fields in-house, while another six fields are included making the number 26 fields • In response to a letter of ONGCs, Ministry informed on 10th October 2010 that the proposal for development of marginal fields through service contract with a more realistic cap on crude prices and also the proposal to increase the cap on crude prices for existing contracts need to be examined by the Board of ONGC in the context of the existing guidelines/framework • Board has approved outsourcing of marginal fields with improvements/ changes of the existing service contracts in the 224th meeting held on 4th November 2011 31 # 21 Energy Company in the World 31

  32. Next Phase of Outsourcing: 26 Fields 32 # 21 Energy Company in the World

  33. PEL Status (12 fields) 33 ONGC a Wealth Creator

  34. ML Status (14 fields) 34 A FORTUNE Global 500 Company

  35. Issues for marginal fields development • Fiscal Incentive for marginal field development • PML Grant for remaining marginal fields • Environment Clearance for Disangmukh and TichnaField of Assam and Tripura respectively • Freedom to market gas of isolated fields • Approval of DoC for KG deep-water discoveries • Approval of DoC for Mahanadi deep-water discoveries 35 A FORTUNE Global 500 Company

  36. Thank You

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