Mumbai, Dec. 2: Even as Reliance Industries Ltd battles the government over KG-D6 drilling approvals, state-owned Oil and Natural Gas Corporation (ONGC) is quietly cranking up its development programme in the western oil basin — close to its famed Bombay High oilfield where production has started faltering.

On Thursday, the ONGC board cleared plans to develop one of its discoveries.

The PSU today announced that its board had approved the development of a cluster located east of Bombay High apart from another field for a total cost of Rs 2,059.63 crore. This is the first such development work announced by the company in recent times.

ONGC said the B-127 cluster comprised three marginal fields that include B-127, B-157 and B-59. According to the company, the cluster has significant hydrocarbon accumulations and has total in-place reserves of 24.6 million tonnes of oil and oil equivalent gas (mtoe) of which about 15.35 mtoe is being considered for development.

On the other hand, the B-55 field discovered in 1978 is further north-east of Bombay High and B-127. ONGC said this field had been in production since November 1999, and it was producing about 2.05 million standard cubic metres of gas per day from nine wells.

“The exploratory well B-55-5 in this new area has produced gas from Mukta formation on testing; thus leading to the requirement of its further development,” it told the stock exchanges.

Production from the cluster is scheduled to commence from May 2014. The B-127 cluster development envisages cumulative production of 1.836mt of oil and 2.093 billion cubic metres (bcm) of gas over 10 years and the additional development of B-55 envisages an output of 0.155 mmt oil and 2.583 bcm gas over 13 years.

ONGC has made two additional discoveries, which have been notified to the Directorate General of Hydrocarbons. The two discoveries take the total number of discoveries to 11 in this fiscal. ONGC had made three discoveries in the second quarter and one in the subsequent month after announcing five in the first quarter.

Even as ONGC looks to ramp up production, RIL has seen lower production at its KG-D6 block. Reports now say that the Mukesh Ambani flagship has approached the Centre to approve capital spending and changes to the production sharing contract following the entry of BP as a strategic partner in 28 oil and gasfields that include the KG-D6 block.

ONGC has underperformed the benchmark index over the past few months because of uncertainty over subsidy sharing mechanism.