The Hindu : Capturing value across entire energy chain

Online edition of India's National Newspaper
Thursday, Apr 24, 2003

Business

Business

Capturing value across entire energy chain

By Our Staff Correspondent

MUMBAI APRIL 23. The Original Gas in Place (OGIP) in eight of the Krishna Godavri Basin gas wells is estimated to be 14.5 trillion cubic feet after having done the initial exploratory work, according to P. M. S. Prasad, President, Oil & Gas, RIL. This is after only 15 per cent of the KG B6 areas have been explored.

Reliance estimates a capital expenditure of Rs. 3,000 crores a year for 3-4 years in exploration and production, including transportation infrastructure. If more discoveries came to light the capex would go up, according to Mr. Prasad. The capital expenditure would be met through internal accruals.

After completing exploratory work in four wells in October 2002, it was estimated at 7 trillion cubic feet and this went up to 10.46 trillion cubic feet after initial exploratory work on six wells was conducted.

Further, Mr. Prasad said, the company planned to deliver gas three years hence. The company is also working towards building pipelines to connect the blocks and forming a gas transportation backbone to connect customers.

Reliance's oil and gas strategy is aimed at further enhancing the level of vertical integration in its energy business and capturing value across the entire energy chain.

RIL is now the largest E&P (Exploration and Production) player in India with over 288,000 sq. km of awarded exploration acreage in 32 blocks and one block in Yemen.

RIL's oil and gas division at present contributes less than one per cent of RIL's revenues. The company expects this share to grow significantly in the next 3-4 years when production from the newly discovered gas fields is likely to commence.

RIL's Panna-Mukta fields produced 12.35 lakh tonnes of crude oil and 37 billion cubic feet of gas during the year and are now producing about 26,000 barrels a day of crude oil and around 2.4 million cubic metres a day of gas.

The Tapti field produced around 72 billion cubic feet of gas during the year and is now producing around 5.4 million cubic metres a day of gas.

Mr. Prasad said, "Only about 16 per cent of deep water exploration had been done in one well. Deep water will be the thrust of exploratory efforts for us.

The growth opportunities are in integrating downstream production and go to the customers directly". The company has obtained approval for setting up 5,800 retail outlets and plans to set up 1,500 of these by April 2004 at a capital expenditure of around Rs. 3,000 crores. It will set up another 800 outlets by 2005.

Regarding refining and marketing (R&M), the overall domestic demand for petroleum products improved during the year by 1.8 per cent against a drop of one per cent last year. During the third quarter of the year, the Jamnagar Refinery undertook its first ever planned shutdown of certain units since it began commercial operations in April 2000.

The refinery processed 28.5 million tonnes of crude during the year. Mr. Prasad said, the crude throughput would go up to 30 million tonnes during the year and "by the end of the year, this would go up to 33 million tonnes".

The refinery's yearly average capacity utilisation has been 106 per cent but it peaked in 2002-03 at 116 per cent. Exports of refining products during the year were 6.57 million tonnes (8.63 million tonnes).

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