Reliance Industries may defer development of R-Series and other satellite gas fields in the eastern offshore KG-D6 block if the gas price outlook was uncertain, its junior partner Niko Resources of Canada said.

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RIL has made 19 oil and gas discoveries in the KG-DWN-98/3 block in the Bay of Bengal and so far only three - Dhirubhai-1 and 3 gas and MA oil and gas fields, have been brought to production. Multi-billion dollar development plans for five other finds including the significant R-Series have been approved.

In its Annual Information Form for 2014-15 fiscal filed with Canadian regulatory authorities, Niko, which holds 10% interest in KG-D6 block, said the development of these discoveries was "dependent on the future economic viability of the required investments."

Bringing the finds to production, called development, was "dependent on the future long-term price outlook for gas sales from these projects and the significant uncertainty in this outlook could mean that the development of these reserves could be deferred," it said.

Additionally, it may result in reductions in the company's reported reserves or future net revenues, it said.

RIL is the operator Krishna Godavari basin KG-D6 block with 60% interest while Niko has 10%. BP plc of UK has the remaining 30% stake.

Niko said on expectations of natural gas prices doubling to US $8.4 per million British thermal unit from April 1, 2014, the focus in the 2013-14 fiscal shifted to developing and appraising the assets in the KG-D6 Block.

However, after three deferrals, in October 2014, the Government of India approved a new domestic gas pricing policy that provided for a price of US $5.05 per mmBtu on Gross Calorific Value (GCV) basis or US $5.61 per mmBtu on Net Calorific Value (NCV) for the period of November 1, 2014 to March 31, 2015. This compared to gas price of US $4.2 on NCV basis in the prior period.

While the price for November to March was "significantly lower than anticipated," the rate for April 1, 2015 to September 30, 2015 was lower at US $4.66 (GCV) or US $5.18 (NCV). 

Niko said the field development plan for the R-Cluster gas discovery was approved by the Government in August 2013.

"The plans included the re-entry and completion of certain existing wells and the drilling of new wells, all connected with new flow-lines and other facilities into existing D6 Block infrastructure. The expected gas production rate would be in the range of 12 million standard cubic meters per day, significantly increasing the utilisation of existing KG-D6 facilities," it said.

Since the approval of the field development plan, the KG-D6 contractor group has completed the concept and front-end engineering design (FEED) for facilities and procurement activities for subsea long leads as well as installation contract for facilities and for rig commenced.

Niko said a field development plan for nine satellite discoveries was submitted for approval in July 2008. At the request of the Government, an optimised field development plan (OFDP) for the discoveries was submitted, covering the development of four of the discoveries in the first phase of development and the potential development of the remaining five discoveries in a future phase.

The OFDP was approved in January 2012.

"The development of these discoveries is dependent on the future economic viability of the required investments," it said.