New Delhi: Reliance Industries Ltd (RIL) and two partners, BP and Niko Resources, plan to invest Rs 27,127 crore ($5 billion) over the next three to five years in the KG-D6 block to develop four trillion cubic feet (tcf) of discovered natural gas reserves.
In a joint statement issued after a meeting between BP Group CEO Bob Dudley, RIL’s Chairman and Managing Director Mukesh Ambani and Petroleum Minister M Veerappa Moily in Delhi today, the two companies said they have promised to speed up the projects, provided the necessary clearance from the government is in place.
The investment includes field optimisation through compression and water handling, which will augment production starting 2014. Natural gas production from the block has now touched a low of 30 million standard cubic metres a day (mscmd).
RIL has a running dispute with the Comptroller and Auditor General of India (CAG) on the scope of its audit of investment made by the partners. CAG had earlier recommended that clearances for making investment should not be granted till RIL provides required access to the statutory auditor.
Indicating a positive response from the ministry for the big-ticket investment, the statement quoted Moily promising taking necessary measures "to fast track these projects and help them attain economic viability”. Besides clearances for its investment plan, the companies are looking for higher gas price from the government. The KG-D6 gas price, currently fixed at $4.2 a mBtu, is considered unviable by the private companies for deepwater gas. The price is due for revision in April 2014.
At current international liquefied natural gas (LNG) prices, 4 tcf of natural gas would cost more than $50 billion to import this volume of gas into India, said the statement. “We will bring all our expertise in deep water to explore the prolific gas basins in India and BP looks forward to a rewarding and successful exploration programme in the coming years,” said Dudley in the statement.
Dudley is part of the trade delegation accompanying British Prime Minister David Cameron. “BP is already the largest single British investor in India and the decision to join forces with Reliance Industries to invest $5 billion in the next few years into India’s gas markets reinforces how two of Britain and India’s leading companies can work together to invest in and supply the energy needs of the future, creating jobs and boosting prosperity," the statement quoted Cameron.
In a partnership with RIL, BP in 2011 took a 30 per cent stake in multiple oil and gas blocks in India, including the producing KG D6 block and the formation of a 50:50 joint venture to source and market gas in India – India Gas Solutions Private Limited. According to the companies, by the end of 2012, fields in the KG D6 block had produced 2 tcf of gas and 22 million barrels of oil, which would have cost more than $35 billion to import into India at current imported crude oil and LNG prices.
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