Lok Sabha Question No. 1094 (UNSTARRED), answered on 2024-02-08
Subject: Issues in Oil Production
Ministry: PETROLEUM AND NATURAL GAS
Asked by: Chinta Anuradha

## LOK SABHA UNSTARRED QUESTION NO. 1094 TO BE ANSWERED ON 08 TH  FEBRUARY 2024

## ISSUES IN OIL PRODUCTION

## 1094 .  SHRIMATI CHINTA ANURADHA:

## पेĚोिलयम व Ĥाक ृ ितक गैस मंğी

## Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a)   the details of specific technical issues causing delay in the commencement of oil production from the KG-DWN-98/2 project, initially expected in December 2023;
- (b)   the details of the mitigation measures taken/being taken by the Government to address these issues and expedite the oil production timeline; and
- (c)   the details of revenue sharing mechanism implemented for this project and the proportion of benefits accruing to Andhra Pradesh?

## ANSWER

पेĚोिलयम और Ĥाक ृ ितक गैस मंğालय मɅ राÏयमंğी ( ĮीरामेƳरतेली )

## MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS (SHRI  RAMESWAR TELI)

- (a) & (b): The deep sea NELP-I Block, KG-DWN-98/2, located in the Krishna-Godavari basin of Eastern Coast of India, is being operated by the national oil company- Oil and Natural Gas Corporation  Limited  (ONGC)  with  100%  Participating  Interest.  The  block  consists  of  three clusters of discoveries namely Cluster-I, II & III. Whereas Cluster-II is under production stage, Cluster-I & III are under development stage and exploration/ appraisal stages respectively.  In Cluster-II  project,  first  gas  commenced  from  March  2020  and  first  crude  oil  has  started  from January 2024.

The deep sea Block KG-DWN-98/2 is an offshore project at a water depth of 400-1500 m with a challenging geology. In this difficult block, delays have occurred due to multiple challenges and issues  in  actual  project  implementation  such  as  sub-surface  geological  issues,  shifting  of  well locations and surface facilities/processing platform, delays and disruption in project supply chain for  vendors  spread  across  multiple  countries  due  to  COVID-19  pandemic  and  challenging weather conditions.

A Project Monitoring Committee has been set up by the Directorate General of Hydrocarbons (DGH) under the Ministry of Petroleum & Natural Gas, to monitor Cluster-II of the aforesaid NELP Block regularly and advise the Operator (ONGC) on various technical issues to expedite completion  of  project.  The  Government  has  also  extended  all  required  support  sought  by  the operator (ONGC) for execution of this flagship Project.

(c):  The  Block  KG-DWN-98/2  is  under  Production  Sharing  Contract  (PSC)  signed  with  the Government of India (GoI) on 12.04.2000. Under the production sharing mechanism, the profit petroleum is to be shared between the parties based on a predefined methodology provided in the Contract.

The projected economic benefits of the deep-sea Project KG-DWN-98/2 to the country including State of Andhra Pradesh inter alia are as under:

- i. Addition of around 30.5 Billion Cubic Meters (BCM) of Gas and 14.24 Million Metric Tonnes (MMT) of oil by the year 2036-37.
- ii. Employment  of  about  3000  to  3500  Indians  per  month  on  an  average  under  various contracts for the development of this project at Offices, Fabrication Yards, Construction sites and Drill sites located in Andhra Pradesh & other parts of India.
- iii. Other  tangible  benefits  such  as  fabrication  of  various  subsea  structures  as  part  of  this project for the first time in India as part of the Make in India Campaign.
- iv. In addition, fishermen livelihood compensation of over Rs. 765 crore, for development of villages  of  over  Rs.  74  crore  and  Right  of  User  (RoU)  Compensation  (land  +  crop) of over Rs. 1.63 crore  have been paid for laying the Gas Export pipeline.
- v. Further,  with  the  commencement  of  gas  production,  several  underutilized  gas-based industries  have  been  revived,  thereby,  providing  employment  opportunities  to  local people and contributing to Nation's Economy.

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