NEW DELHI: India will save $9 billion in oil
"Yesterday evening, as RIL has informed us, production has begun," he told reporters.
Initial output was at 2.5 million standard cubic metre and will gradually increase. "Tomorrow it will become five million standard cubic metre per day," Pandey said.
The first, of the 15 fertiliser plants, that will get all of the initial output, is expected to get the gas in 3-4 days time, he said, adding, "The most distant plant will get the gas in about 15 days."
"In four months time, the production will be 40 mmscmd and in about a year's time it will be 80 mmscmd," he said.
"It will reduce oil import bill by about $9 billion annually during peak production at current prices," Pandey said adding, gas sales over the 11 year-life of the field will generate $42 billion in revenues.
The government's share in the production would amount to a minimum $14 billion, he said.
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Reliance begins pumping gas from KG basin field
NEW DELHI (Reuters) - Reliance Industries has started pumping natural gas from its massive deep-sea field in the Bay of Bengal, which at full throttle will nearly double India's gas output, the company said on Thursday. Full Article
By Nidhi Verma
NEW DELHI (Reuters) - Reliance Industries has started pumping natural gas from its massive deep-sea field in the Bay of Bengal, which at full throttle will nearly double India's gas output, the company said on Thursday.
Petroleum Secretary R.S. Pandey told reporters the company was producing 2.5 million standard cubic metres a day (mmscmd) of natural gas on Wednesday, and output may double in a day.
The first customer in the fertiliser sector would start getting gas supplies from Reliance in four to five days, Pandey said, while the plant farthest from the field would get supplies in 15 days.
The company last week signed a sales agreement with fertiliser firms, which have to be given first priority in gas sales, according to a government decision.
Shares in Reliance Industries rose 5.8 percent to 1,671.25 rupees by 0917 GMT, in a firm market that was up 5.1 percent.
Reliance, which has invested $8.84 billion for the development of the D1 and D3 fields in its D-6 block, said last month the company would initially produce 10-12 mmscmd and raise it by about 10 mmscmd a month, reaching its peak production of 80 mmscmd by the end of this year.
"At peak level it would amount to 44 percent of current oil and gas production taken together," Pandey said.
He said at a price of $4.2/mmBtu and the current reserve size, the project had a potential to generate $42 billion in revenue over its life of 11 years.
ccording to the upstream regulator's website, the expected peak production of 80 mmscmd can be sustained for six years. The fields are expected to hold reserves of 10.03 trillion cubic feet.
Reliance has a 90 percent interest in the block, while Canada's Niko Resources holds the rest.
Pandey said D-6 gas would help India reduce its crude imports by $9 billion a year, or about 10 percent of the import bill in 2008/09.
Reliance said the exploration block it was awarded in the first round of India's New Exploration Licensing Policy (NELP) had started production six and a half years after the gas was discovered.
Pandey said gas production from the deep-water project would encourage potential investors in the auction of 70 blocks in the next round of NELP that would be launched on April 9.
But Cairn India CEO Rahul Dhir said this week that potential investors may be deterred by the government's move to restrict Reliance's marketing freedom.
India will offer 24 deepwater, 28 shallow water and 18 onland blocks in the next round, Pandey said.
(Additional reporting by C.J. Kuncheria)
(For our special online coverage of the impact of Reliance's gas field on India's energy sector, please click:
here)
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How RIL can help India save $9 billion
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$9 billion! That's how much India will save with the RIL KG D-6
April 2, 2009
"Yesterday (Wednesday) evening, as RIL has informed us, production has begun," he told reporters.
The initial output was at 2.5 million standard cubic metre and will gradually increase. "Tomorrow (Friday), it will become five million standard cubic metre per day," Pandey said.
Image: Reliance Industries' KG-D6 floating production storage and offloading vessel is seen off the Bay of Bengal. | Photograph: Reuters
$9 billion! That's how much India will save with the RIL KG D-6
April 2, 2009
"It will reduce our oil import bill by about $9 billion annually during peak production at current prices," Pandey said, adding that gas sales over the 11 year-life of the field will generate $42 billion in revenue.
The government's share in the production would amount to a minimum $14 billion, he said.
Reliance Industries created history when natural gas from its deep-sea Krishna Godavari basin fields flowed to surface on Wednesday. This feat, which was achieved in just seven years, will transform India's energy landscape.
"Natural gas production from the wells started at 1700 hours Tuesday and it reached the onland receiving facility at Gadimoga in Kakinada district of Andhra Pradesh this (Wednesday) morning," a source in know of the development said.
It took 13-14 hours for the gas to travel from the sea-bed to the onshore facility. "The flare (at Gadimoga) lit up at 0920 hours," the source said.
A company spokesperson confirmed the start of gas production, but did not give details. "We will be issuing a statement shortly," he said.
Reliance took just seven years from the date of discovery to begin gas production from the deep-sea KG-D6 block as against the global practice of a minimum nine years.
The gas would boost power supply from idle electricity generators starved of fuel and produce cheaper urea for agriculture.
"It is a landmark in the history of oil and gas production. World-over, this has created a new benchmark for deep-sea developers," said Director-General of Directorate General of Hydrocarbons V K Sibal.
The $8.835-billion (Rs 441.75 billion) project will double domestic natural gas production when the field hits its peak output of 80 million cubic meters per day in 2010.
It will wipe out the fuel deficit at urea-making fertiliser plants and meet half of the 36 mmcmd gas shortfall in power plants. Reliance will produce enough gas to meet about a third of the UK demand.
"Whenever I have interacted with officials from global oil majors like Chevron and BP, they have been highly appreciative of the project management skills of Reliance," Sibal said.
he gas output will start at 10 mmcmd and rise by the same volume every month to reach 40 mmcmd by July-end.
"Each well is capable of producing 5-6 mmcmd gas," Sibal said.
"Our endeavour is to quickly ramp it up to peak 80 mmcmd. We are targeting the peak-out by the year-end (2009 calendar year)," the company's head of oil and gas business, P M S Prasad, had stated last week.
If achieved by 2009-end, the peak output will come a year earlier than previously planned. Of the 18 wells drilled in the Phase-I of the project, six would be put on production initially and the remaining would be hooked up one by one. Besides doubling the nation's domestic gas production, KG-D6 gas would displace costly naphtha or imported LNG as fuel at power and fertiliser plants
At $4.2 per million British thermal unit, KG-D6 gas is 25 per cent cheaper than the fuel produced by UK's BG-operated Panna/Mukta and Tapti fields in western offshore and 20 per cent cheaper than liquefied natural gas imported on long-term contracts.
'KG-D6 gas will replace about seven per cent of India's oil consumption in 2009-10, rising to 14 per cent in the following three years,' Goldman Sachs said recently in a report.
Besides, it would also reduce the Asia's third-largest oil consuming nation's current account and fiscal deficits and support economic growth.
'All else being equal, the current account deficit could improve by 0.2 per cent of GDP in 2009-10, and progressively go higher to an average improvement of 0.6 per cent of GDP in 2010-11 to 2013-14,' the report said.
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Source:ET,Reuters India,Rediff
http://in.reuters.com/news/globalcoverage/IndiaEnergy
