Reliance Industries and its partners BP and Niko Resources plan to invest $4 billion to develop satellite fields in the D6 block, where the operator is also keen to explore for more hydrocarbons that may lie beneath the fields already under production, company officials and government sources said.
“This is a rough estimate but overall we plan to invest $4 billion in developing the satellite fields in KG D6 and are hoping to submit an integrated development plan by the end of the current fiscal,” a senior Niko executive said at a concall between the company’s senior management and analysts.
Separately, a government official said Reliance had approached the directorate general of hydrocarbons saying there may be more oil or gas under the reservoir of the D1 and D3 field, raising prospects of reversing the sharp fall in production from the block. DGH officials said it was prudent to allow RIL to drill an exploration well where there was a possibility of a discovery. “Anyway, the mining lease for the D1 and D3 development area is with RIL for about 20 years and we can’t miss the chance of a potential hydrocarbon discovery. But a decision will be taken after proper examination of its geology seismic data,” the official said.
According to Niko, the reserves in the block were now estimated to be 1.93 trillion cubic feet, down from earlier estimates of close to 10 tcf. RIL’s shares fell by 2.5 per cent to Rs 718.60 in the Bombay Stock Exchangeafter the announcement.
Reliance hopes to reverse the decline in gas production in D6 with an integrated development plan that will develop all the discoveries. Analysts say that the development of the four satellite fields was a step in that direction.
The Niko official said the company had been advised not to drill any more wells in the DI and D3 fields of the block. “Our reserve certification consultant Ryder Scott has said that we do not need to drill any more wells in these blocks as the existing infrastructure is enough,” the official said, although the government has penalized RIL saying the company’s output has fallen because it hasn’t drilling the agreed number of wells.
Reliance executives have told the government that more wells are not required. “This is a consensus opinion that both RIL and BP also agree to,” said a source close to RIL. Reliance and its partners are seeking higher prices of gas produced from the D6 block. “It remains to be seen whether the government can live up to its end of the contract where we will be allowed to align the gas price to a fairly arrived discovered price,” said the Niko official.
(curtsey: economic times)
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