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ONGC Overstated KG Reserves: Cairn India

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[State-owned Oil and Natural Gas Corp (ONGC) may have overstated the natural gas reserves in its much-talked about KG basin KG-DWN-98/2 block, which sits next to Reliance Industries' prolific KG-D6 fields. Cairn India, which had made four discoveries in the KG-DWN-98/2 block before selling 90 per cent out of its 100 per cent stake in the block to ONGC in 2005, has written to the oil regulator DGH saying the state-owned firm is grossly overstating the reserves in block, sources said. It believes that "the hitherto discovered oil and gas resources in the block are only marginal to non-commercial, because of their small size and the potential high development costs due to water depth versus the prevailing gas prices." ONGC estimates that the blocks holds an in-place volume of 25.61 million tonnes of oil and 197 billion cubic metres of natural gas. It is proposing an investment of over USD 7.3 billion to produce up to 30 million standard cubic metres per day of gas. The warning by Cairn, which holds a 10 per cent interest in the acreage and is credited with finding oil in an area in Rajasthan where global giant Royal Dutch/Shell exited saying there was no hydrocarbons, is significant in view of the fall in gas output from Reliance's neighbouring KG-D6 block. Reliance had in 2007 estimated that the Dhirubhai-1 and 3 fields in the KG-D6 block would hit 69 mmscmd of output, but production has fallen to 40 mmscmd due to what the Mukesh Ambani-led firm says are reservoir complexities. (PTI)