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Hardy Oil, a joint venture partner of Reliance Industries, said today that it is reviewing its investment in India in 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 JV partners may have to relinquish portion of the block due to Indian Defense Ministry’s new policy on access restriction. It said the India’s Defense Research & Development Organization has classified about one third of D3 block as impact zone and has imposed certain access restrictions to that area. Hardy has 10% stake in block; Reliance Industries has 60% stake, while BP holds 30% stake. Reliance is also the operator of the block.
“The new GOI 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 of Hardy.
Situated in the Krishna Godavari Basin on the east coast, the D3 exploration licence encompasses an area of 3,288 km, in water depths of 400 meters to 2,200 meters, 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 approximately 3,250 km of 3D seismic data over the block.
