Reliance Industries Ltd. (RIL) is gearing up for new gas production from its Krishna Godavari (KG) basin fields on India’s east coast.
The development comes in the backdrop of the company witnessing its lowest gas production in the December quarter to 1.53 million metric standard cubic metre per day (mmscmd) from its KG D6 block.
Average gas production from the D1D3 field for the quarter stood at 1.53 mmscmd from three wells as the field is in a late-life stage with challenges associated with sand and water ingress.
RIL’s domestic oil and gas production is likely to drop further as the company has handed over the Panna-Mukta oil and gas fields back to the government in December 2019 after operating them for 25 years.
These fields produced 3.9 mmscmd of gas and 10 barrels of oil per day (bopd) during the quarter.
RIL is taking significant steps along with its partner BP to reverse the production decline in domestic upstream with the development of R cluster series in the KG D6 block. “There is a lot of visibility on the gas production and we are targeting the first gas mid 2020,” said V. Srikanth, joint CFO, RIL told The Hindu.
Initially, RIL is expected to produce five million standard cubic metres per day of natural gas from the R-Cluster field, while the satellite cluster is expected to produce gas from mid-2021. Theproject will start production from mid-2022. RIL, along with BP, is working on these three projects at an investment of ₹35,000 crore to develop three trillion cubic feet of gas reserves and bring about 1 billion cubic feet a day of new domestic gas on-stream, phased over 2020-2022.
“The company has completed the first offshore installation campaign and has commenced the second offshore installation campaign,” RIL said in a presentation to the analysts.
The KG D6 JV successfully conducted the first round of gas bidding in October 2019 and the gas sales purchase agreements (GSPAs) are being signed with customers.
The production sharing contract of KG basin block was amended as RIL and BP were assigned Niko Resources’ stake of 10% in the block and accordingly, RIL’s participating interest in block KG D6 now stands at 66.67% and BP’s at 33.33%.
RIL’s loss from the oil and gas segment almost doubled to ₹366 crore during the December quarter on a 26% fall in revenue to ₹873 crore as the performance continued to be impacted by declining volume and prices.
