Reliance starts production in Krishna-Godavari basin
In a significant development, Reliance Industries has begun crude oil production from the nation’s first deep-sea oilfield in Krishna Godavari basin, an accomplishment that the firm may announce in the next few days.
The company’s predominantly gas-rich D6 block in Krishna Godavari basin on September 17 flowed first oil, said a source in the consortium of Reliance Industries and Niko Resources of Canada which operates the block.
Block KG-DWN-98/3 or D6 will be the first area in deep-sea to produce crude oil since India opened up its oil hunt programme for private and foreign players in 1999 with the advent of New Exploration Licensing Policy (NELP).
The Mukesh Ambani-led group operates India’s largest refinery at Jamnagar in Gujarat and will start production from another only for exports unit in next couple of month. It will however not refine the D6 crude at its refineries and instead sell it to state refiners.
Reliance, the source said, has initially opened one of the two oil producing wells in the MA oilfield in the D6 block. “Oil flowed at the rate of 200 barrels per day but once system stabilises, the choke will be fully opened to produce more.” Once both the wells are in full operation, the output will rise to 10,000 to 15,000 barrel per day within weeks. Two more wells are planned to be drilled on the field which would raise the output to 34,000 barrels per day (1.7 million tones a year).
Reliance is likely to sell 0.8 to 1 million tonnes of oil from the field to Hindustan Petroleum’s Vizag refinery while the remaining output will go to Chennai Refinery, a subsidiary of Indian Oil Corp.
The company earlier this week successfully installed a floating production storage and offloading system (FPSO) on the oilfield.
Reliance invested $2.234 billion in the MA oilfield that is estimated to hold 53.5 million barrels of reserves and will produce oil for 11 years – beginning with 20,000 bpd in first year and rising to 30,000 bpd in second year before beginning to decline.
Aker Smart-1 FPSO, contracted for $733 million, will help eliminate the need for piping the oil to the shore for onward transportation to refineries. Oil tankers can directly load at the FPSO and carry the oil to the destined refineries.
Reliance is separately investing $5.2 billion in phase-I of its gas field development plan, the first output of which is expected at least two months later than the first oil.
The firm has made 18 oil and gas discoveries in D6 and besides MA it is currently developing Dhirubhai 1 and 3 gas finds at an additional investment of $5.2 billion.
Initial gas output that may start now before November-end is seen at 15 million standard cubic meters per day and going up to 40 mmscmd in three months.
Niko has 10 per cent stake in the 7,645 sq km KG-D6 block. Reliance is the operator with 90 per cent interest.The block was awarded to Reliance-Niko in India’s first international bid round in 1999.
Gas production from the Krishna-Godavri basin is expected to start in first quarter of 2009. The K-G basin will bring down India’s import bill by Rs.1,000 billion per year, Ambani said.
The gas will be sold at a base price of $4.2 per mmbtu (million British thermal unit) compared to the $2.02 quoted by the Oil and Natural Gas Corp (ONGC).
The utilisation of the gas is still embroiled in controversy, with RIL and younger brother Anil Ambani’s Reliance Natural Resources Ltd locked in litigation in the Bombay High Court over sharing of natural gas from the K-G basin.
Source : DNA, HIndu, NDTV
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