Following British Petroleum’s oil spill disaster in the Gulf of Mexico, Reliance Industries (RIL) has decided not to increase output at its D6 block in the Krishna-Godavari basin off the Bay of Bengal until a full review of the safety of the reservoir is completed.
Alok Agarwal, chief financial officer, said the company has already initiated the review.
“We are extracting nearly 30,000 barrels every day from the KG-D6 block. We are doing full review of the reservoir and looking at all operations. Unless this is completed we are not forecasting on ramping up production,” he said.
He not specify a timeline for the completion of the review.
Meanwhile, India’s largest private sector company continues to bet big on shale gas.
DNA Money had earlier reported that RIL is talking to Quicksilver Resources, a US-based exploration and production company that’s into development of shale gas, coal-bed methane and tight-sands gas in North America. On Tuesday, the company did not confirm or deny but said it is looking into many shale gas investment proposals.
About 20 shale gas assets are up for grabs internationally, Agarwal said.
“In the next 10 years, shale gas will be the largest source of energy, overtaking traditional oil production methods. Major oil companies have made big investments in this space… it has better financials with lower risk. We can’t afford to not be a part of it,” Agarwal said
RIL, which has two joint ventures in the US - one with Atlas Energy called Reliance Marcellus LLC with a net acreage of 300,000 acres and, the second where it has a 45% interest in Pioneer’s core Eagle Ford shale acreage.
“In India we have the skillsets required.. But joint ventures allow us to understand the shale business better, and then later we can do it ourselves,” he said.
Meanwhile, RIL posted in-line results with a 32.3% rise in its net profit for the June quarter to Rs4,851 crore and a 86.7% jump in turnover (net) to Rs58,228 crore.
Gross refining margin dropped to $7.3 per barrel for the quarter compared with $7.5 per barrel in the previous quarter and $6.8 per barrel year on year.
Going forward, RIL expects higher demand for transportation fuel like petrol and diesel.
It saw highest production in its refinery for a single quarter at 16.9 million tonne and an operating rate of 109%, against 82-86% maintained by other global players. Exports increased 103.5% to Rs32,849 crore.
RIL’s outstanding debt stood at Rs73,422 crore as on June 30, 2010 as compared with Rs62,495 crore on March 31, 2010.
RIL’s capex for the full year in terms of expenditure is $1.5-2 billion. The petrochemical and polyester business will receive Rs41,700 crore, sources had said earlier.
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