29 May 2009

New RIL gas find may put India among top 15 producers

New RIL gas find may put India among top 15 producers

MUMBAI: Reliance Industries’ (RIL) new gas finds in the Krishna Godavari (KG) basin, if validated by Indian regulators, may place India among the

top 15 gas producers in the world.

RIL’s joint venture partner UK-based Hardy Oil and Gas on Wednesday had announced the discovery of 9.5 trillion cubic feet (tcf) of gas in the D-3 block of the KG basin and another find of 10.8 tcf in another block called D-9.

Neither of these finds has been certified yet by the Indian upstream regulator, but could potentially raise India’s proven reserves of natural gas to a significant extent. Blocks refer to areas, running into thousands of square kilometre, where companies have been allowed to search for oil and gas.

India had proven gas reserves of over 37 trillion cubic feet (tcf) at the end of 2007 according to British Petroleum’s 2008 Statistical review. If another 20 tcf of gas reserves is added, it will place India in the ranks of the top 15 gas producers in the world.

With 57 tcf, India will overtake countries like Azerbaijan, Netherlands and Libya. India’s gas reserves will, if these finds are endorsed by the regulator, then figure just below Canada.

Based upon the gas find, brokerage CLSA has upgraded RIL to “outperform” in the near future.

A technical evaluation report commissioned by Hardy Oil on the potential of the company’s D3 and D9 exploration licences stated that the “best estimate resources for the D3 Block was estimated at 9.5 trillion cubic feet of natural gas and the gross risked best estimate prospective resources in Block D9 is estimated at 10.8 tcf of natural gas and 143 million barrels of oil.”

The technical evaluation of both the blocks were carried out by international consultants Gaffney, Cline & Associates (GCA). The report is on the company’s website.

Commenting on the report, Sastry Karra, chief executive of Hardy in a statement said: “The report confirms the significant hydrocarbon potential of our exploration assets in the emerging world class petroleum system of the KG basin in India. The two discoveries on D3 in conjunction with the acquisition of risk mitigating technologies and geotechnical studies have resulted in the upward revision of the perceived geological chance of success on both of our KG basin blocks.” Hardy Oil has 10% in a special purpose vehicle (SPV) which is exploring these blocks. RIL has the remaining 90%.

When asked for comments a RIL spokesperson declined to do so as Indian upstream regulator the Directorate General of Hydrocarbons (DGH) has banned announcing any new find without its approval. V K Sibal, director general, DGH could not be reached for his comments.

Besides RIL’s latest discovery of 20 tcf, GSPC, a company owned by the Gujarat state government and ONGC have also claimed discoveries of 20 tcf of gas each in the same basin.

These were reported by the media in 2005 and 2006 but are also yet to be certified by the regulator. The DGH has asked both the firms to drill more wells before these claims are validated. Given this track record, it could be some time before Hardy Oil’s claims are confirmed, if indeed that happens.

The KG basin, off India’s eastern seaboard, was relatively unexplored territory till the last years of the 20th century. It is now proving to be potentially India’s equivalent of North Sea or Gulf of Mexico.

India's GDP falls to 6.7% in FY09

Source:Economic Times.com,Rediff.com

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