January 10, 2024 [Oil Price]- Indian state-run Oil and Natural Gas Corporation (ONGC) began this week oil production at a major deepwater oil and gas project, which is expected to boost domestic oil and gas production and help reduce India’s dependence on energy imports.

ONGC said it had launched first oil production from deepwater block KG-DWN-98/2 in the Krishna Godavari basin in the Bay of Bengal, which would raise the company’s oil and gas production by 11% and 15%, respectively. The start-up of the deepwater project was also hailed as a “transformative path for economic development” in India and the state of Andhra Pradesh, off the coast of which the field is located.

The project, estimated to be worth $5 billion, has seen more than three years of delays. It has been delayed several times, and at the end of 2023 it was running three and a half years behind the original schedule for start-up in March 2020, after it was delayed by the pandemic.

KG-DWN-98/2, or the KG-D5 block, sits next to the KG-D6 block of India’s private conglomerate Reliance Industries in the Krishna Godavari (KG) basin.

ONGC initially expected to begin oil production in the block in March 2020. The deadline has been further extended several times. Early in 2023, an ONGC official said crude oil production could begin by June. The timeline was subsequently pushed back to August 2023, then to September 2023, to October 2023, and finally, to November.

Now that the “first oil” milestone has been achieved, India bets on the deepwater project to reduce its reliance on imports, which make up around 85% of the oil India consumes.

India’s energy production is set to rise from the deepest frontiers of the Krishna Godavari basin, Oil Minister Hardeep Singh Puri said.

Production at the field is expected to be 45,000 barrels per day (bpd) and more than 10 million cubic meters of gas per day, the minister added, noting that the project will raise India’s oil and gas production by 7%.

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