Pre-development activities will require almost $7 billion
The oil and gas exploration & production group of Reliance Industries is in a fix. Delays relating to uncertainty on Government approvals for its premium East Coast block have made the company’s board put all future investments proposals on the back-burner.
While the company has chalked out its next phase of capital investments in refining, petrochemicals, retail and broadband services, the exploration business is still in a limbo.
This has led to speculation that the company may exit the business altogether. For Krishna Godavari Basin-D6 block, RIL and its partners BP and Niko are planning to submit a revised field development plan for D1-D3 producing fields, aimed at maximising gas recovery and bringing satellite-identified discoveries in the block to production.
It also plans to pursue approval of the revised field development plan for the MA field in the block, submitted in February.
RIL has also commenced pre-development activities in the D6 block, which include engineering and geophysical surveys and geotechnical investigations.
Indications are that all these activities will require an investment of close to $7 billion. The company has already spent over $5 billion on the fields. The Reliance-BP-Niko combine, which is looking at December-January 2012/2013 to submit the development plan, is yet to firm up final figures.
Sources in know of developments said: “The integrated development would require the contractors to drill more wells. Each deepwater well would cost close to $100 million. The development cost for MA fields is pegged at $1.96 billion and that for the optimised development plan at $1.5 billion.”
The output from D6 block has now dropped below 30 mmscmd after hitting the peak of 60 mmscmd in end-2009. The D1-D3 fields in the block are producing 23 mmscmd and the MA field 5.8 mmscmd.
At present, the contractors are producing from 12 wells in D-1 and D-3 fields. Of the 22 wells drilled here, 18 are producing while four are not connected.
The contractors have eight satellites with 12 discoveries in the block.
Of these, five satellites have been approved for commerciality by the block management committee.