By BLOOMBERG

MUMBAI • Oil and Natural Gas Corp (ONGC) is facing a delay of at least a year in starting production from its biggest project, according to people with knowledge of the matter.

The nation’s top explorer, which planned to produce gas from a deep water block in the Krishna-Godavari Basin off the country’s east coast from June 2019, won’t produce first gas until at least the second half of 2020, the people said, asking not to be identified because the information isn’t public.

Oil production will start a year after gas.

ONGC hasn’t completed tendering for major equipment and services for the US$5 billion (RM19.5 billion) project, they said.

Production from the KG-DWN-98/2 block in the Bay of Bengal, where the depth of water is comparable to ultra-deep fields in the Gulf of Mexico, is critical to Prime Minister Narendra Modi’s goal of cutting India’s oil imports and doubling the share of gas in the country’s energy mix to 15%. Speeding up new developments is also vital for ONGC as it faces declining production from older fields. It plans to spend 11 trillion rupees (RM671 billion) by 2030 to raise output.

The delay in finalising tenders means the company won’t start to drill wells in the block until next year.

Hostile weather conditions in the area allow drilling for only about half the year.

ONGC might be able to start gas production in the later half of 2020 if it finalises contracts soon, the people said.