RIL partner Hardy Oil reviews D3 gas block operations

Hardy Oil, a partner of Reliance Industries (RIL) in the D3 block in the Krishna-Godavari (KG) basin, said on Thursday that it would review its investment in India in the light of unattractive pricing and uncertainty surrounding long-term price outlook for natural gas sales.

In a statement on its half-yearly results, Hardy Oil said the joint venture (JV) partners might have to relinquish portion of the block owing to Indian defence ministry's new policy on access restriction. It said India's Defence Research and Development Organisation has classified one-third of the D3 block as 'impact zone' and has imposed certain access restrictions to that area.

Hardy has a 10 per cent stake in the block; RIL has 60 per cent, while BP holds 30 per cent. Reliance is the operator of the block.

"The new GoI (Government of India) pricing policy implies a significantly lower price than the previously-notified Rangarajan Committee formula. There remains some uncertainty surrounding a pricing premium for deep-water discoveries and the development of our D3 discoveries is dependent on the future long-term price outlook for gas sales. The JV is currently reviewing the appropriate way forward, taking into account policies recently announced by the Indian government and the overall prospectivity of the block," said Ian MacKenzie, chief executive officer, Hardy.

Situated in the KG basin on the east coast, the D3 exploration licence encompasses an area of 3,288 km, in water depths of 400 metres to 2,200 metres, and is located approximately 45 km offshore.

It said four gas discoveries have been made via the Dhirubhai 39, 41, 44 and 52 (KGV-D3-A1, B1, R1 and W1) exploration wells. The joint venture has acquired 3,250 km of 3D seismic data over the block.