Reliance, BP tie up for Rs 40,000 crore gas plan
Reliance Industries (RIL) and its partner BP plc will invest $6 billion or Rs 40,000 crore to develop deep-water gas fields off the east coast and pump out 30-35 million cubic metres of gas a day by 2022.
RIL chairman Mukesh Ambani said the joint project would reduce India’s import dependence and meet 10 per cent of the country’s projected gas demand by 2022.
“This new and historic cooperation will evaluate opportunities in trading that could optimise the value of existing products like oil, gas, fuels, LNG, power and carbon,” Ambani said here on Thursday.
In a joint media briefing along with BP chief executive Bob Dudley, the RIL chief said the two partners had agreed on a strategic cooperation on new opportunities for conventional and unconventional fuel trading.
“Changed policies have allowed us to develop new resources,” BP CEO Bob Dudley said.
BP and RIL came together in 2011 with the former taking 30 per cent stake in multiple oil and gas blocks, including the producing Block KGD6 in India operated by the Indian energy giant. Since then, the two companies have invested over Rs 10,000 crore ($1.6 billion) in deepwater exploration and production.
Gas production from the KG-D6 block has fallen considerably from its peak in 2010. The total output was about 7.4 million cubic metres a day in the quarter ended March, a sharp drop from 54.5 million in the three months quarter ended December 2010.
The substantial decline was reported just before BP acquired 30 per cent stake in the energy assets.
Reliance had initially projected a peak gas production of 80 million cubic metres a day from these blocks. The company had attributed the sharp fall in output to water and sand entering the gas wells, causing low flow pressure.
The two companies have now expanded their partnership and have agreed to award contracts to progress the development of the ‘R-Series’ ultra-deep water gas field in the Krishna-Godavari Dhirubhai gas field or KG-D6 block off the Andhra coast. The R-series (D34) project is a dry gas development in water-depths of more than 2,000 metres, about 70 km offshore. This is the first of three planned projects in Block KGD6, which consists of the R-Series, Satellites and D55.
These projects will be developed in an integrated manner producing about 3 trillion cubic feet of discovered gas resources.The development plans for the next two projects (Satellites and D55) will be submitted to the government for approval by the end of 2017. “The development of the three projects, which will involve total investment of up to $6 billion (Rs 40,000 crore), is expected to bring a total of 30-35 mmscmd (1 billion cubic feet of gas a day) of new domestic gas production, phased over 2020-2022,” the BP CEO said.
The additional gas production is set to help the government change the energy mix and take gas’ share in the total to 15 per cent from 6.5 per cent now by 2020. Local production would also benefit consumers in terms of lower price. Both Mukesh Ambani and Bob Dudley also met prime minister Narendra Modi and petroleum minister Dharmendra Pradhan during the day to discuss energy related issues.