NEW DELHI (Bloomberg) -- Oil & Natural Gas Corp., India’s biggest energy exploration company, may spend about 7 billion rupees ($150 million) to maintain crude oil production from the Mehsana block in the western state of Gujarat.

The money will be spent over the next two to three years for drilling a new well and replacing aging crude pipelines, A.K. Hazarika, director of onshore operations, said by telephone from New Delhi on Monday.
“The investment may not result in production increasing from Mehsana, but we are trying to maintain output,” Hazarika said. The area currently produces 2.2 million metric tons of crude a year, or about 8 percent of state-owned ONGC’s total output in the year ended March.
New Delhi-based ONGC is investing money to maintain production from three-decade old fields in India as demand for oil grows in the world’s second-fastest growing major economy. The explorer plans to spend 66 billion rupees in the year ending March to keep output at current levels from fields off the west coast, including Mumbai High, which accounts for half of India’s production, Sudhir Vasudeva, director of offshore operations, said April 21.
The explorer hasn’t found new oil areas in Mehsana, Hazarika said. The Business Standard reported on Monday that ONGC had discovered traces of crude in Mehsana that could produce 1 million tons of oil every year, citing an unidentified company official.
ONGC has yet to decide on the location of the well to be drilled in Mehsana, Hazarika said.
The explorer’s shares rose 2.5 percent to 1,194 rupees at 11:56 a.m. in Mumbai trading compared with a 1.8 percent increase in the benchmark Sensitive Index of the Bombay Stock Exchange.
ONGC started oil production from two small new fields in Assam and Gujarat states a month ago, Hazarika said.