Reliance plans $6.5 bn investment in KG-D6 to regain lost glory

New Delhi: Reliance Industries plans toinvest $6.5 billion in its KG-D6 gas fields to re-attain natural gas production of up to 60 mmscmd by 2019-20 andregain the lost glory of the prolific block.

“We can attain a production level of 40 to 60 millionstandard cubic meters per day (mmscmd) by 2019-20 provided we

get timely approvals and the right natural gas price,” RILPresident & Chief Operating Officer (E&P) B Ganguly told PTI.The Bay of Bengal KG-D6 fields, which began gas productionin April 2009, had hit a peak of 69.43 mmscmd in March 2010before water and sand ingress led to shutting down of morethan one-third of the wells. Current output is just over 14mmscmd.

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While the company carries out remedial measures to augmentproduction from the currently producing Dhirubhai-1 & 3(D1&D3) and MA fields, it plans to invest $3.155 billion inproducing 20 mmscmd of gas from R-Series discoveries in theblock and another $1.529 billion in four satellite fieldsto produce 10 mmscmd.

Another $1.2 billion is planned to be invested in otherdiscoveries in the block, he said.The company will invest $747 million in augmenting production from D1&D3 and MA fields by putting up boostercompressor and repair work at the closed wells.

Besides$6.451 billion, another $6.151 billion isexpected to be spent as operating expenses, he said.These investments were besides the $7.572 billion thecompany has already sunk in development of D1&D3 and MAfields, $1.261 billion of operating expenses and $1.094billion in exploring for oil and gas in the block.

Ganguly said such large investments were viable at noless than $ 7.5 per million British thermal unit gas priceafter considering the cost of capital and royalty paid to thegovernment on production.

“First gas from the satellite developments is expected inmid-2017-18,” he said adding the company has not madeinvestment or production projections of the giant MJ1discovery made 2-km below D1&D3 field recently.MJ1 may hold 2-3 trillion cubic feet of reserves, almost

equal to reserves in D1&D3 fields.RIL says MJ1 and most of the other discoveries in theKG-D6 block were uneconomical to develop at the current $4.2 per mmBtu price.

It is drawing comfort for the future investments from thegovernment approval of the Rangarajan formula for pricing ofgas according to which the rate in April 2014 would be $8.2-8.4.“The key to these developments is timely approvals andgas price. If we don’t get the right price, the gas willremain in the ground,” he added.

PTI