According to a source, while the ECS will allow the time to ONGC, given huge investments are involved, it will have to pay a penalty. ECS comprises secretaries of finance, petroleum and law.

ONGC completed the acquisition of GSPC’s 80% in DDW in August 2017. According to the Directorate General of Hydrocarbon-approved FDP submitted by GSPC, commercial production was to start by 2011. However, trial gas production started in 2014 and commercial production in April 2016.

“ONGC’s argument is that it is evaluating the existing model and given there is a lot of investment involved in deep water exploration, further modelling is required,” said the source.

As FE reported earlier, ONGC is taking out from the four wells that were dug by GSPC. While a fifth well dug will be hydro-fracked soon, rigs are being deployed to dig the sixth and the seventh wells. Company officials have also claimed that from practically nil at the time of acquisition and only 0.5 million standard cubic metres per day (mscmd) during trial runs in early 2017, the block’s output has zoomed to the current level of around 2 mscmd.

Appraisal wells are dug to collect data and information, and prepare model for any field which includes number of wells, precise locations, type of well, and accordingly financial commitment is made. Under a December 2016 deal, ONGC acquired GSPC’s 80% stake in DDW assets for $1.2 billion.

ONGC has got assurance from the Gujarat government that the PSU will get at least $6/million British thermal units (mmBtu) for the gas from the DDW block in the first year of production. The price will see staggered increments every year to reach $6.9/mmBtu in the fifth year and remain at that level during the remaining life of the asset.

In case, the government-determined gas prices are higher than that offered by the Gujarat government, ONGC will realise the higher price from the market. For the October 2018-March 2019, the price for gas discoveries deepwater, ultra deepwater and high-pressure-high-temperature areas has been fixed at $7.67/mmBtu.