RIL starts ground work for developing oil fields

The Mukesh Ambani-promoted Reliance Industries Ltd (RIL) on Tuesday floated an Expression of Interest (EoI) to develop its oil and gas blocks, including some of the discoveries in the KG-D6 block off the coast of Andhra Pradesh.

RIL is eligible to a higher price for natural gas produced from these discoveries under the new norms if it withdraws arbitration proceedings against the government. RIL currently has four blocks, though development programmes in both the KG-D6 and NEC blocks was on hold, waiting for clarity on the gas price.

The EoI includes contracts for conceptual engineering/front-end engineering and design, and other works for blocks for blocks under the New Exploration & Licensing Policy.

A company executive said based on the bids, RIL would give a revised field development plan to the government. The firm is also looking to place engineering, procurement, installation and commissioning contract for subsea facilities and pipelines for deepwater field development and offshore platform modification work. For KG-D6, the firm has invited an EoI for all operation and maintenance services, equipment and materials.

RIL’s EoI comes a month after the government announced a package to rescue the domestic upstream oil and gas producing sector.

According to the petroleum ministry, the new pricing norms for difficult fields would help in production of 6.5 tcf of gas valued at $28.35 billion, or Rs.1.8 trillion. Of this, RIL has eight deep-water and ultra-deep water discoveries with 2.53 tcf of gas. BP is a 30% partner in RIL’s 21 gas blocks, including in the KG- DWN-98/3, known as KG D6. Canada’s Niko Resources has a 10% holding in KG D6.

Last month, government-promoted ONGC decided to invest Rs 34,012 crore, the largest in its history, for the KG basin. The investment will be made over a period of 3-4 years to bring Cluster 2A and 2B into production. At its peak production in 2023, the field will contribute 3.5 million tonne of oil, around 15 per cent of the total oil production of 22 MT envisaged by then, D K Sarraf, ONGC chairman and managing director, said after a board meeting on March 28. Gas production at peak would be 5 billion cubic meter or 25 per cent of total output.