RIL suspends drilling operations on Laila scare

Reliance Industries (RIL) could make losses of around Rs 25 crore a day for suspending drilling operations in the East Coast on a perceived threat from cyclone Laila.

Industry sources said RIL has deployed around 12 rigs in the area that command a daily charge of between $2,50,000-$4,50,000 (Rs 1.15 crore-Rs 2.07 crore). RIL produces about 30,000 barrels of crude oil everyday from the field. Production will be stalled for at least two days considering the condition of the sea.

“In view of the threat from cyclone Laila, Reliance Industries has exercised caution and suspended all drilling operations in the East Coast. The rigs operating in its contract areas were moved to safe zones. All production operations on the FPSO (Floating Production Storage and Offloading) vessel operating in the KG D6 block was also suspended,” RIL had said in a statement on Wednesday.

“We remain vigilant and weather conditions are being monitored round the clock to determine when production can be restarted safely. The same has been conveyed to all authorities including MoP&NG and DGH,” the statement said.

Insurance industry sources said RIL does not have any insurance cover for loss of profit due to business interruption. So, insurance companies will not pay any claim due to losses incurred from cyclone Laila. Industry experts estimate the total insurance cover for RIL to be around $500 million.

According to agency reports, Cyclone Laila made landfall today with winds of up to 90 km/h (55mph) and although it looked weaker than originally predicted, its being forecast that there could still be extensive damage. Laila has been classified as a “severe” storm and the worst for 14 years to hit the state of Andhra Pradesh.