RIL to relinquish a KG block on lack of viablity

New Delhi: Reliance Industries has decided to relinquish a Krishna-Godavari basin block after it established that the lone natural gas discovery in the area was not viable, the company’s minority partner Hardy Oil & Gas Plc said today.

RIL, which had won the KG-DWN-2001/1 (D9) block in the third round of New Exploration Licensing Policy (NELP) in 2003, had in June last year found gas in the second well on the area that sits in next to the prolific KG-D6 block.

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Yesterday, RIL proposed to return the licence because the block’s gas potential was low and further exploration was not needed, Hardy, which holds 10 percent interest in the block, said in a statement.

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RIL is the operator of the block with 60 percent stake and UK’s BP Plc holds the remaining 30 percent.

“On 23 April, 2012, the company (Hardy) received a proposal from RIL … for the relinquishment of the block. The proposal set out that following the integration of all aeoscientific data and the results of the three exploration wells, including the KG-D9-A2 natural gas discovery, that the block’s hydrocarbon potential is low and further exploration or appraisal activity is unwarranted,” the statement said.

Hardy, it said, has agreed to RIL proposal.

RIL had not found any hydrocarbon reserves in the first well drilled on the block in October 2009. Subsequently, it drilled two wells in 2011 – KG-D9-B3 well was plugged and abandoned in January last year while a natural gas discovery was announced in KG-D9-A2 well (later named Dhirubhai-54) in June 2011.

The company, which could not drill the fourth and final exploration well within the remaining exploration period, had time until July this year to submit an appraisal programme. In the absence of the submission of an appraisal programme the block would have stood relinquished.

“Hardy has provided its consent to the relinquishment of the D9 block,” the statement said.

Situated in the Krishna Godavari Basin, the D9 licence encompassed 11,605 sq km in the Bay of Bengal where water depths vary from 2,300 meters to 3,100 meters.

The block is immediately adjacent to the RIL operated D6 block, where over 1 billion cubic feet per day of gas was being produced.

Hardy said its D3 exploration licence, located in the same Basin, remains the main focus for its organic growth potential. “We will continue to collaborate actively with our partners RIL and BP to optimise the exploration programme for this highly prospective block.”

RIL had last year sold 30 per cent stakes in 21 oil and gas blocks including KG-D6 and KG-D9, to BP Plc for $ 7.2 billion.

PTI