ONGC Mahanadi gas find could cut import dependence

Research Analyst: UJVIN NEVATIA (PROPRIETOR: NEVAT INVESTMENTS) | SEBI Registration No.: INH100009628 Oil and Natural Gas Corporation Limited (

) has struck gas in the Mahanadi Basin, with the well testing at close to 2.25 million cubic metres per day. ONGC says the find could help reduce India’s gas import dependence, currently around 50% of demand. What happened? The discovery was made at a depth of around 1,600 metres under the government’s Samudra Manthan exploration programme. Testing is still underway and the final flow rate has not been confirmed. ONGC estimates around 600 million tonnes of oil equivalent of resources in the Mahanadi Basin, but these are not yet confirmed reserves. Why does it matter? India currently imports around half of its gas requirement. Higher domestic production could reduce import dependence and support the government’s target of increasing gas to 15% of the energy mix by 2030 from around 6-7% currently. My view The discovery is positive for ONGC’s exploration portfolio, but the financial impact cannot be assessed yet. The important step is converting the discovery into commercially recoverable reserves. The final reservoir size, flow rate and development cost will determine its value. What I am watching next I would track appraisal results, confirmed reserves, final production potential and the development timeline. The next two-three wells planned in the campaign will also show whether the Mahanadi Basin can support a larger cluster development. No Recommendations Source: NDTV Profit Disclosure: I, my entity, associates or relatives don't have any holding, position or other material interest in Oil and Natural Gas Corporation Limited.