RIL scales up KG basin investment

13 Feb 2009

Reliance Industries (RIL) is tying up nearly $6 billion to develop nine satellite discoveries in the Krishna Godavari (KG) basin. This is over and above the company’s $11-billion infusion for production of oil and gas from the famous D-6 block in the same basin.

In a recent note, the upstream regulator, the directorate general of hydrocarbons (DGH) said the proposal for the third development project covering nine satellite discoveries has been submitted to the management committee by the contractor (RIL). The capital investment of $5.91 billion has been envisaged by the contractor for this project. The proposal is under the managing committee’s consideration.

The note, which has a detailed update on discoveries in a block called KG-DWN-98/3, said RIL is expected to start commercial production of 2.2 trillion cubic feet (TCF) gas from these satellite fields by 2013.

RIL has pumped in $8.8 billion for production of over 80 million metric standard cubic metres per day (mmscmd) and $2.2 billion to develop an oil discovery in the KG basin. The gas production is expected to begin this month.

Initially, the company will start with 5 mmscmd of gas, then scale it to 12 mmscmd by June and to 40 mmscmd by 2009-end. The production will be doubled to 80 mmscmd of gas by 2010-end and it will continue producing 80 mmscmd till a period of six years, following which the production level will start falling.

RIL had commenced commercial production of oil form the KG basin in September last year. The initial capacity of production is around 10,000 barrels of oil per day (bopd) which will go up beyond 35,000 bopd. Power and fertiliser firms are making a beeline to buy gas from RIL’s KG basin. The gas will be sold at the government-approved rate of $4.2 per mmbtu.

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