The Oil and Natural Gas Corporation (ONGC) has started oil production from its much-delayed flagship deep-sea project in Krishna Godavari basin in Bay of Bengal, helping reverse years of decline in output, the company said.

ONGC has started producing from the Cluster-2 project in KG-DWN-98/2 block and will slowly ramp up output.

KG-DWN-98/2 or KG-D5 block sits next to Reliance Industries’ KG-D6 block in the KG basin, and has a number of discoveries that have been clubbed into clusters. It is situated offshore the Godavari river delta in the Bay of Bengal.

This development is set to boost ONGC’s overall oil and gas output by 11 per cent and 15 per cent , respectively, it said in a statement.

According to the reports, the remaining oil and gas fields of the block are expected to become operational by mid-2024. At peak, the field is likely to produce 45,000 barrels of oil per day and over 10 million metric standard cubic meters per day of gas.

In a post on social media platform X, formerly Twitter, Petroleum and Natural Gas Minister Hardeep Singh Puri had said the project is likely to add 7 per cent to India’s current oil and gas production. Prime Minister Narendra Modi also lauded the achievement as a significant milestone in India’s energy sector.

The cluster-2 oil production should have begun by November 2021 but was delayed because of the Covid pandemic.

The state-owned ONGC has hired floating vessel Armada Sterling-V, owned 70 per cent by SPOG (Shapoorji Pallonji Oil & Gas) and 30 per cent by Malaysia’s Bumi Armada, for producing oil from below seabed.

The FPSO (floating production, storage and offloading vessel), Armada Sterling-V, has been waiting to receive oil since January 2, 2023, after she was hooked up on December 27, 2022.

While certain specialized subsea hardware was sourced internationally, the bulk of the fabrication work was carried out at the Modular Fabrication Facility in Kattupalli, Tamil Nadu.

ONGC previously set May 2023 as the first Cluster-2 oil deadline, extended to August 2023, September 2023, October 2023 and finally December 2023.

Cluster 2 field is divided into two blocks namely 2A and 2B, which as per the original investment decision were expected to produce 23.52 million metric tonnes of oil and 50.70 billion cubic metres (bcm) of gas over the life of the field.

It was estimated to contain reserves of 94.26 million tonnes of crude oil and 21.75 bcm of associated gas, while Cluster 2B is estimated to host 51.98 bcm of gas reserves.