Reliance Industries Ltd (RIL) is betting on its shale gas business in fiscal 2012-13. However, its premium gas asset in country's East Coast – D6 block continues to see a drop in output.

The company's net turnover for 2011-12 from oil and gas exploration and production business was Rs 14,115 crore, against Rs 17,322 crore last year. The drop was mainly on account of the decline in D6 output.

Joint ventures

RIL's three joint ventures in the US reported a seven-fold increase in output year-on-year. The combined output of these ventures stood at 233 million standard cubic feet a day of gas and 34.7 million barrels a day of liquid.

The three shale gas joint ventures — Chevron, Pioneer, and Carrizo — will look at cost optimisation and encash on growing demand.

In 2010, RIL entered into these ventures as part of its strategic focus on pursuing partnerships, with experienced and successful operators in the fast growing resource base of shale gas in North America. The company said 2012-13 would be a challenging year for shale gas.

“In light of the current gas supply and industry conditions, the joint ventures will take a long-term view around commodity price fluctuations, and will moved forward with execution and capital efficiency improvement plans for enabling both cost reductions and well performance enhancements,” the company said.

Increasing visibility on the potential of shale gas has resulted in the US benchmark Henry Hub gas prices averaging at $ 3.66/mmBtu versus $ 4.13/mmBtu in 2010-11. Prices remained range-bound in the US due to excess drilling and lack of export infrastructure. However, the Asian liquefied natural gas prices remained linked to crude oil and spot prices touched $13-$14/mmBtu.

>richam@thehindu.co.in

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