KG-D6 Block: Reliance Industries to surrender two deep-sea finds

Reliance Industries (RIL) has been asked by the Directorate General of Hydrocarbons (DGH) to relinquish two deep-sea satellite gas discoveries—D6 and D19—in the KG-D6 block, off India’s east coast after the company told the regulator that it had no immediate plan to develop these fields. According to two people familiar with the development, the company, which had submitted a combined field development plan (FDP) for four discoveries namely D2, D6, D19 and D22, has now said while it would develop two of these discoveries — D2 and D 22 — straightaway, investments in the other two fields would be contingent on the success in the first set of fields. “The managing committee (of the DGH) therefore asked the company to surrender D6 and D19 discoveries,” one of the sources said. RIL is the operator of the KG-D6 block with a 60% interest while BP has a 30% stake. The remaining 10% is held by Niko. The companies produce around 7-8 million standard cubic metres of gas per day at present. Emails sent to RIL and BP on April 5 for this story remained unanswered. RIL and BP in June last year had announced an investment of Rs 40,000 crore to reverse the falling production at the KG-D6 block. Apart from the four deep-sea satellite fields mentioned above, which were to be developed together, D29 and D30 finds along with R-Series and MJ gas discoveries were to be developed through these investments. In 2012, the government approved a $1.5-billion plan for the four satellite fields with an estimated reserve of 617 billion cubic feet, with an eight-year production plan with daily output of 10.36 million standard cubic meters. The FDPs were to be submitted by 2016-17.

However, the source quoted above said the government is now of the view that if explorers are not willing to go by the FDP, they should rather relinquish the fields rather than sit on them. RIL had relinquished fields in the past as well, while it has consolidated its holding areas. The Mumbai-based company had also exited from all its overseas fields. While RIL was not willing to develop the deep-sea satellite fields earlier as gas prices were low, it decided to develop the fields after a price of $6.3 per million British thermal unit (mmBtu) was fixed for the October 2017-March 2018 period for difficult fields. The prices have recently been revised to $6.78 per mmBtu for difficult fields and $3.06 per mmBtu for others for the April-September 2018 period. While RIL has been taking long-term orders for KG-D6 gas, according to the sources, since exploration is being done for all fields in its possession, it is finding ways to optimise the discoveries. “It is trying to put to use all its facilities to extract maximum (gas),” said the second person. RIL did not submit any expression of interest under the Open Acreage Licensing policy under which the government is offering fields after a gap of almost eight years.