Reliance, BP make new gas find off India's east coast

MUMBAI (Reuters) - Reliance Industries Ltd and BP Plc on Friday announced a new gas condensate discovery off the east coast of India in the Cauvery basin.

The discovery is 62 km off the coast and is the second gas discovery in the block. Reliance is the operator of the block with a 70 percent stake and the British company holds the rest.

Shares in Reliance ended 1.7 percent higher at 819.50 rupees on BSE Sensex that rose 1.2 percent.

Falling output at Reliance's Krishna Godavari D6 field, a key natural gas field off India's east coast, had capped its revenue in the last few quarters.

But analysts have said a government decision to double domestic gas prices from April 1, 2014 was likely to give Reliance and partner BP an incentive to boost exploration and infrastructure spending.

Bernstein Research said in a note that it believed the new gas discovery was material and could be commercially developed given the broader resource potential of the block. It said the discovery has significant follow-on potential.

"While India macro events and weaker regional refining margins are dominating current stock movements, we continue to believe that the E&P business for Reliance in India is starting to look promising," said the Bernstein note.

In February, Reliance said that the company and BP plan to jointly invest more than $5 billion over the next three to five years to boost output at the D6 block.

(Reporting by Sumeet Chatterjee, editing by William Hardy)