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Just when the industry and experts had begun to think that Mukesh Ambani had grown disenchanted with the oil and gas exploration business, the chief of Reliance Industries, and its partner BP Plc announced an investment of ₹40,000 crore ($6 billion) in the controversial KG-D6 block.
After separate meetings with Prime Minister Narendra Modi and Petroleum Minister Dharmendra Pradhan, the Reliance chief and Bob Dudley, BP’s Group Chief Executive, unveiled their plans for the entire energy value chain — from exploration and production to retailing of petroleum products, and from natural gas and LNG imports, to green energy.
“BP-Reliance have agreed to award contracts to progress the development of the R-series for the ultra deepwater gas field in block KG-D6 off the East coast of India in an integrated way, producing approximately three trillion cubic feet of discovered gas reserves,” Dudley told reporters.
Dudley said this is expected to bring 30-35 million standard cubic meters of gas per day (mmscmd) of new domestic gas production, over 2020-2022. “We plan to submit field development plans for the next two projects, the satellites under D-55, for government approval, before the end of 2017,” he said.
Controversy The KG-D6 asset has been dogged by controversy, with declining output from the current producing areas of D6 (today, the block produces less than 7 mmscmd of gas from the wells which are seeing natural decline) even as public sector giant ONGC is accusing RIL and its partners of monetising gas from its adjacent acreage.
According to Ambani, besides investments in upstream sector, BP and RIL have agreed to a strategic cooperation to expand their existing partnership.
“Under this new cooperation, our two companies will jointly explore options to develop differentiated fuels, mobility and advanced low-carbon energy businesses in India,” the Reliance Industries CMD said.
Asked what triggered his return to the sector, especially when he is contesting the government on certain issues, Ambani said: “The new policies that have been announced have facilitated this investment.”
“We still have some pending arbitrations and we will follow the legal process to bring those arbitrations to an end as per the normal course of law.”
Industry watchers feel the development would invigorate the sector and trigger investment flows.
Former ONGC Chairman and Managing Director RS Sharma said: “…this will enthuse investor sentiments. Although gas pricing is an issue, I am sure they would have got some assurance from the government, from which they draw this confidence.”
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