New norms to make RIL's deepwater blocks viable: BofA ML

The new gas pricing policy would make deep water discoveries of Reliance Industries Limited (RIL) viable, according to equity research firm Bank of America (BofA) Merrill Lynch. According to the approved pricing policy, gas from deepwater and ultra deep water discoveries would get a higher price to be determined as per the prescribed procedure. “Thus R-cluster, satellite fields and MJ1 discoveries in the KG-D6 block and those in NEC-25 and CYD5 would realise higher price and would be developed,” said BofA ML, in a note.

The Central government had on Saturday approved a 33 per cent hike in natural gas price from the existing $4.2 per million British thermal unit (mBtu) to $5.61 per mBtu. It had also said all discoveries in the ultra deep water areas, deepwater areas and high-pressure, high temperature areas would be given a premium on the new price. With the matter relating to cost recovery on account of shortfall in envisaged production from D1, D3 discoveries of KG-DWN-98/3 under arbitration, RIL would be paid the earlier price of $4.2 per mBtu till the shortfall quantity of gas is made good.