State-run Oil and Natural Gas Corp (ONGC) plans to begin production from its Krishna Godavari basin block off the east coast in 2012 and has tied-up with gas utility GAIL (India) for transportation and marketing of the fuel.
"We envince an initial output of 12 million standard cubic meters per day from the KG-DWN-98/2 block in 2012," ONGC Chairman and Managing Director RS Sharma told reporters after his company signed an agreement with GAIL for monetising of the reserves.
The KG-DWN-98/2 block sits next to Reliance Industries' 50 trillion cubic feet KG-D6 block that is expected to begin gas production from July 2008 with an initial output of 40 mmscmd. Reliance output would double in less than a years time.
Sharma said, six discoveries have been so far made in the block, the largest being the December 2006 find that is estimated to hold an in-place reserve of 2.08 trillion cubic feet.
"We have got an appraisal (of the December discovery) done by two independent domain experts and will submit the report to the sector regulator DGH next month. Once DGH approves of it, we will file a development plan for bringing the discoveries to production," he said.
"The 12 mmscmd is only a preliminary estimate of initial output and actual production can be higher," he said. The development plan may be filed in 2008, he said while refusing to disclose the total reserves in the block. "We will first inform the DGH."
ONGC has roped in Norsk Hydro of Norway and Petrobras of Brazil as equity partners in the block for the development of the deep-sea gas find.
ONGC Director (Business Development) AK Balyan and GAIL Director (business development) AK Purwaha on Tuesday signed a memorandum of understanding for formation of a joint venture for transportation and marketing of the gas not only from the KG basin block but also from ONGC's Mahanadi basin find.
"We may also look at opportunities for setting up of city gas distribution networks for supply of CNG to automobiles and piped gas to households and commercial established for cooking purpose," GAIL Chairman and Managing Director UD Choubey said.
On the Mahanadi basin find, Sharma said, the recent gas discovery was not commercial on a standalone basis and the less than one trillion cubic feet reserves in that would have to be clubbed with other finds beginning production.