New Delhi, April 2: State-owned Oil and Natural Gas Corporation (ONGC) will invest about Rs 40,000 crore to bring to production oil and gas discoveries in its Krishna-Godavari basin block KG-D5, chairman Dinesh K. Sarraf said today.

ONGC is using a cluster approach to bring oil and gas finds in KG-DWN-98/2 block, or KG-D5, to production by 2018-19. It sits next to Reliance Industries' Bay of Bengal block KG-D6.

"We plan to submit a field development plan (FDP) for the discoveries by the second quarter. Total investment in eastern offshore will be over Rs 40,000 crore," Sarraf said. This will be the single largest investment by ONGC at one location.

The block is divided into northern and southern discovery areas. The estimated reserves of the northern area are 121 million tonnes (mt) of oil and 78 billion cubic metre (bcm) of gas, and that of the southern area are 80.9bcm of gas.

ONGC plans to develop the discoveries in the block in three clusters - 14.5 million metric standard cubic metres per day of gas (mmscmd) for 15 years from Cluster-1 comprising finds of the northern discovery area in the KG-D5 block and the G-4 find in the a neighbouring area.

Cluster-2A mainly comprises oil finds in the northern discovery area, which can produce 75,000 barrels per day (3.75mt per annum), ONGC director (offshore) Tapas Kumar Sengupta said.

Cluster 2B, which is made up of four gas finds in the northern area, envisages a peak output of 14mmscmd of gas, with cumulative production of 32.5bcm of gas in 14 years."We are currently going ahead with the development of Cluster 2A and 2B as we do not have all approvals for Cluster-1 discoveries," Sengupta said, adding that oil is planned to be produced using a floating production system.

The third cluster is in the southern area. However, the gas is located at a depth of 2,4400-3,200 metres underwater, and there is no technology to produce the gas.<>

The ONGC scrip had closed at Rs 306.45 on the BSE yesterday, close to its 52-week low of Rs 306.45.

A floating production, storage and offloading unit is a floating vessel that receives oil from subsea, processes it and stores it until oil can be offloaded onto a tanker or shipped for transportation to shore.

ONGC plans to drill 14 oil wells and 10 water injectors in Cluster-2A and is expected to produce 31.5 million tons of oil in 15 years.

"We plan to get first gas by mid-2018 and first oil by mid-2019," he said.

Cluster-3 is the UD-1 gas discovery in SDA.

"UD-1 lies in water depth of 2400-3200 meters and there is no technology to produce from such depths. And so Cluster-3 is presently not being pursued for development," he said.

ONGC and RIL won KG-D5 and KG-D6 block in the first round of auction under New Exploration Licensing Policy (NELP) in 2000. RIL began production from the oil discovery in KG-D6 in September 2008 and put gas find on production in April 2009. PTI ANZ NKD NS 04021648 NNNN