ONGC, BP and Reliance Weigh Shared $1 Billion Offshore Hub for Deepwater Gas

what happened

India's state-owned explorer ONGC, together with BP and Reliance Industries, is looking at a common offshore infrastructure project worth $1 billion in the Mahanadi basin, Moody's reports, citing two industry executives. The idea, put forward by the country's petroleum ministry, is so far at a preliminary stage, and technical consultants are expected to be hired soon. Neither the companies nor the ministry responded to requests for comment.

The shared hub is meant to lower development costs, spare operators from building separate platforms for small finds and make marginal fields more economical to produce. Other producers could use the facility on a tolling basis, a setup already in place in regions such as the North Sea.

The design has not been chosen yet: it could be a floating production, storage and offloading vessel, delivered in prefabricated sections, or a fixed installation that would take longer to build. Either way, such infrastructure would need at least three to four years to complete, and it would mainly carry natural gas along with some condensate.

why it matters

Deepwater and ultra-deepwater projects require heavy upfront capital spending, so shared infrastructure could determine whether some discoveries get developed at all. For India, which wants to raise domestic output, the plan points toward more collective ways of working; for markets, it is a long-horizon project with no effect on supply in the coming years.

market impact

Indian gas: a shared hub could lift output over the long term; ONGC, Reliance and BP would feel any effect only after years.

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