Reliance Industries to stop production at two KG fields as output falls

All hopes now on three new discoveries having 3 trillion cubic feet of discovered gas

Mukesh Ambani-led Reliance Industries (RIL) and its partner BP are likely to stop production at the D1 and the D3 fields of KG-D6 block in six to nine months due to a decline in the output. 

RIL has already informed the Directorate General of Hydrocarbons (DGH) about its decision to stop gas production in the two fields, said a government official privy to the development. In 2018, the company had announced the initiation of decommissioning formalities, but it gave no timeline. 

In an investor presentation, RIL had said that adhering to the government's site restoration guidelines, the company submitted a bank guarantee for the decommissioning activity for the existing producing fields (D1, D3 and MA). Later, media reports said that the production in the MA field was about to be over by October 2018. 

The government official said three new discoveries are expected to revive the fortunes of the companies. These new fields will likely produce 30 million metric standard cubic meter of gas per day by 2021-22. 
 

Of the 19 oil and gas discoveries made by RIL in Krishna Godavari Dhirubhai 6 (KG-D6) block, MA had started in September 2008 and D1 and D3 fields in April 2009. 

Sashi Mukundan, BP's country head and regional president, told Business Standard that KG basin will be back in action soon. "The first production from the new fields are likely to happen in 2020. Contracts are already in place for it," he said. The companies are expecting three projects in the Block KG D6 integrated development plan — including R-Series, satellite cluster and MJ (D55) — to be the game-changers for KG basin. 

The three projects put together have around 3 trillion cubic feet of discovered gas resources, where the companies are investing around Rs 40,000 crore. 

BP had taken over 30 per cent stake in oil and gas blocks in India operated by RIL in 2011. Since then, the two companies have invested around $2 billion.

In another media report, Mukundan has said that the company is working on a sustainable plan to chalk out its retail roadmap in India. BP has licences to set up 3,500 fuel retail stations in India. However, the biggest challenge for the company is the monopoly of state-run oil companies in the sector. 

Of the total 64,050 retail outlets in India,  27,459 are under Indian Oil, 15,357 are under Hindustan Petroleum, and 14,651 are with Bharat Petroleum. Among private players, Nayara Energy runs 5,033 outlets, Reliance Industries has 1,400 and Shell operates 144; other small players have six outlets.