BP-RIL to take new plan for KG-D6 to govt

Gas output from the block has been declining for more than a year

BP-Reliance Industries will present to the government a fully integrated development plan for the KG-D6 block in the next few weeks to maximise use of the entire existing infrastructure to make more discoveries in the block off the country’s east coast.

“Our initial focus is on the KG-D6 block,” said Sashi Mukundan, country head of Indian operations at BP. “The RIL and BP teams are looking at all options to increase production from the block.” The move comes at a time when gas output from the country’s biggest gas field has been declining consistently. Mumbai-based RIL, the block operator, has been under pressure to arrest sagging output.

Gas output at D6 has been declining for more than a year, resulting in a sharp fall in India’s gas production. This has led to lower gas availability for key sectors like power and fertiliser which are forced to depend on expensive imported gas. The RIL-operated KG D6 field is currently producing 34.5 million standard cubic metres of gas per day (mscmd) compared to 53-54 mscmd a year ago. Even this is expected to further slide to an all-time low of 27 mscmd by April-May this year due to issues with the reservoir.

METICULOUS DRILL

* Plan to be readied in the next few weeks’, aims at the maximum use of existing infrastructure to produce balance of discoveries from the block

* Assignment comes amid steady decline in gas output from the  country’s biggest gas field

* BP aims to enhance production to a sustainable level from both the existing fields

* BP seeks import parity for gas it produces from KG-D6 along with partner RIL

Mukundan said BP aimed to enhance the production to a sustainable level from both the existing fields, besides the “next wave” of developments —D6 Satellites and R-Series (fields in KG-D6 block) and the (Orissa offshore) NEC-25. Clarity on gas pricing, he said, was vital for the development of the “next wave” of projects, which would add production beyond 2015, but for which investment decisions need to be made next year. “We believe a forward-looking gas policy framework with closer integration to global energy markets, allowing marketing freedom with a transparent market determined price will help future projects come on-stream,” he added.

Mukundan sought import parity for the gas produced by it along with its partner Reliance Industries from KG-D6 fields in the Bay of Bengal. It means a minimum of three-fold increase compared to the current price of $4.2 per million British thermal units. BP, which last year bought 30 per cent stake in 23 oil and gas blocks of RIL including the showpiece KG-D6, said import parity would be a rate equivalent to the price at which gas in its liquid form (liquefied natural gas) is imported from Qatar on a long-term contract.