The Hindu Business Line : Reliance starts pumping crude from Krishna-Godavari basin

New Delhi/Mumbai, Sept. 19 Reliance Industries Ltd (RIL) has put an end to speculation regarding its ability to exploit hydrocarbon from its offshore asset in Krishna-Godavari Basin, on schedule. It has been able to flow crude oil for the first time from the deepwater area.

Sources told Business Line that the company has started crude oil production off the Andhra Pradesh coast and an announcement is expected to be made by the company’s Chairman and Managing Director, Mr Mukesh D Ambani, on Sunday. RIL started pumping crude oil from its Dhirubhai 26 field in D6 Block from September 17.

RIL’s D6 Block (KG-DWN-98/3), which is predominantly a gas rich area, has attracted attention not only for its finds but also for the controversies regarding who would be the beneficiary of the gas.

The current oil output is expected to be over 200 barrels per day. Sources maintained that oil production from the field will be ramped up slowly.

The Block is held by a consortium of RIL and Niko Resources of Canada. RIL is the operator of the block with 90 per cent stake. The D26 field has been found to have oil, condensate, and associate gas.

While the oil would be sold to refiners, the associate gas, sources said, would be injected back. The FPSO (floating, production, storage and offloading system) installed by RIL earlier this week has the facilities to handle all – oil, condensate and associate gas. Therefore, nothing would go waste, sources explained.

Sharing row

The find came into the public domain when the younger brother decided to slug it out in the court on the issue of sharing of natural gas with RIL. Reliance Natural Resources Ltd of the Anil Ambani group and RIL are currently in litigation in the Bombay High Court over sharing of natural gas from the K-G Basin fields. The court has restrained RIL from selling it to third parties. The next hearing is on September 30.

The oil output from the D 26 field is expected to rise to 10,000-15,000 barrels per day soon and finally taken to 34,000 barrels per day (1.7 mtpa).

FPSO system

The FPSO, which has been contracted for $ 733 million, has a production capacity of 60,000 barrels of oil per day and can store up to 1 million barrels.

It has been stationed at the oil production site and shuttle vessels will be used for offloading oil from the FPSO and carrying the produce to the coastal refineries.

This will help eliminate the need for piping the oil to the shore for onward transportation to refineries. RIL, however, may not refine the oil at its existing and soon-to-be commissioned Jamnagar refineries. Indications are that the crude will be sold to public sector refiners like Hindustan Petroleum Corporation’s Visakhapatnam refinery and Indian Oil Corporation’s subsidiary, Chennai Petroleum Corporation Ltd.

RIL has invested $ 2.234 billion in the oilfield. It is investing $ 5.2 billion in phase-I of its gas field development plan, production from which is expected by the end of this year.