Setback in ONGC's KG-DWN-98/2 Block-IV: History can be cruelly unforgiving
The biggest challenge for ONGC chairman Shashi Shankar is to to be able to keep his focus on containing both cost and time escalation in the KG-DWN-98/2 block to a point where positive returns are possible. 8The KG-DWN-98/2 block can turn out to become a technological and economic nightmare if not handled well. 8The breakeven levels look good at this point in time on account of high prevailing price of gas, but the gas markets are volatile, and are subject to vagaries of global demand-supply pressures, and it will be unwise to hope that they will go above the levels at which hurdle rates were calculated for the project. 8Quickly folding up the negotiations leading up to contracting for the project is the real challenge as of now before equipment and service prices go up, buoyed by the recent uptick in offshore E&P investments 8The window of opportunity is narrow and Shankar will have to use all the skills and experience at his disposal to make this work. Or history can be cruelly unforgiving.