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Reliance Industries and its partners in the Krishna Godavari Basin D6 block fear that gas pricing could influence the future investments in the gas fields. The block partners hoped that a decision could be taken soon to expedite the investment plan.
The Reliance-BP-Niko Resources combine, which is working on an integrated field development plan to increase output from D6, said that the current $4.2/mmBtu (at well head) is not viable to bring the satellite discoveries in the block to production.
Sources privy to the development said that the block partners have been asking the Government to link the prices to market (discount to spot LNG) prices. However, the Government is yet to consider reviewing the price. The current price ($4.2/mmBtu) is applicable till 2014.
A satellite field is a pool of oil and gas near a bigger field that can be developed using the infrastructure of the larger field.
Mr Sameer Bhatia, Senior Director/Consulting Leader – Oil & Gas, Deloitte Touche Tohmatsu India Pvt Ltd, said, “Spot LNG prices have been ruling high in Asia for a while now. They peaked around May, but have been hovering around and over $15/mmBtu for some time now. And the forecast in the short term is not rosy at all, as the prices are expected to remain high.”
Reliance-BP-Niko was looking at December-January 2012-13 to submit the development plan.
The integrated development would require the contractors to drill more wells. Each deepwater well would cost close to $100 million. “Any contractor would look for return on investment, so gas price would be crucial in working out the investment plan, not the development plan of the field,” sources said.
Reliance, the operator of D6, has faced flak for drop in gas output. Currently, the D-1, D-3 and MA fields in the block together are producing 30 mmscmd after hitting a peak of 60 mmscmd in end-2009.
At present, the contractors are producing from 12 wells in D-1 and D-3 fields. It had drilled 22 wells, of which 18 were producing and four were not connected.
The block partners of the country’s largest gas fields have eight satellites with 12 discoveries in the block. Of these, five satellites have been approved for commerciality by the block management committee.
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