Business Today
Reliance-BP complete Rs 25,000 crore investment to revive KG-D6 block

Gas production from KG D6 integrated development is expected to help reduce India's import dependence and it will amount to over 10 per cent of the country's projected gas demand in 2022

Reliance-BP complete Rs 25,000 crore investment to revive KG-D6 block

Representative Image

Reliance Industries (RIL) and its joint venture partner BP Plc have completed an investment of around Rs 25,000 crore at its three offshore hydrocarbon assets in Krishna Godavari (KG) D6, over the last two years. The JV will invest another Rs 10,000 crore in the blocks which are slated to commence production between mid-next year and 2022. The companies expect a production of one billion cubic feet (bcf) of natural gas a day from its assets when all the three fields--R Series, Satellite & MJ--start pumping gas full throttle.

"Commercial production from R-Series will begin from mid-next year, while Satellite and MJ fields will start selling gas in 2021 and 2022, respectively," sources said. They confirmed that about Rs 25,000 crore of the overall investment of Rs 35,000 crore committed by RIL and BP has been deployed to erect the deep-water infrastructure. Mukesh Ambani, chairman, RIL said at the last annual general meeting (AGM), "projects to develop these gas-fields are amongst the most complex being executed anywhere in the world."

RIL-BP received approval for developing MJ (also known as D55) field in June. MJ is the last of three new projects in the Block KG D6 integrated development plan. It had earlier received approval for the development of 'R-Series' deep-water gas field in June 2017 and Satellites cluster in April 2018. The three fields together have about 3 trillion cubic feet (tcf) of discovered gas reserve.

India consumes over 5 bcf of natural gas a day and aspires to double gas consumption by 2022. Gas production from KG D6 integrated development is expected to help reduce India's import dependence and it will amount to over 10 per cent of the country's projected gas demand in 2022, company sources said. RIL's gas production from KG basin has been shrinking in the last decade because of geological constraints in exploration and production. BP was roped in by RIL to make use of the former's technology to revive production. RIL sold 30 per cent stake in its hydrocarbon assets to BP for over $7.2 billion in 2011.

In the last financial year, revenues for RIL's oil & gas business-- including KG D6, Panna-Mukta-Tapti fields and shale gas in the US-- decreased by 3.8 per cent to Rs 5,005 crore. The company continued making EBIT (earnings before interest and tax) losses in the last three financial years and posted EBIT loss of Rs 4,500 crore for three years. The British giant had taken impairment and write off charges on books because of the losses, but reversed it in 2018, expecting revival of gas production in KG D6.

Also Read: Unlike urban areas, consumer sentiment soaring in rural India: CMIE

Also Read: Reliance Jio breaks its promise; to charge for calls to rival networks

Also Read: E-commerce festive sales: Did consumers really spend $3 billion in a week?

Get latest news & live updates on the go on your phone with our News App. Download The Business Today news app on your device
More from BIZ WRAP