Reliance, BP Start Gas Production From R-Cluster - Asia’s Deepest Project

Reliance Industries Ltd. and its partner bp Plc of the U.K. have announced the commencement of natural gas production from Asia's deepest project, according to a company filing with the stock exchanges.

The production from ultra-deepwater R-Cluster, the first of the three deepsea projects Reliance-bp are developing in the eastern offshore KG D6 block, started production, the two firms said in a statement.

Reliance and bp are developing three deepwater gas projects in block KG D6 -- R Cluster, Satellites Cluster and MJ -- which together are expected to meet about 15% of India's gas demand by 2023, the company statement said.

Reliance is the operator of KG D6 with a 66.67% participating interest and bp holds a 33.33% stake.

"These projects will utilise the existing hub infrastructure in KG-D6 block.”

The R-Cluster field is located about 60 kilometres from the existing KG-D6 Control and Riser Platform (CRP) off the Kakinada coast and comprises a subsea production system tied back to CRP via a subsea pipeline.

Located at a water depth of greater than 2,000 metres, it is the deepest offshore gas field in Asia. The field is expected to reach plateau gas production of about 12.9 million standard cubic metres per day (mmscmd) in 2021.

Mukesh Ambani, chairman and managing director of Reliance Industries Limited said: "This is a significant milestone in India's energy landscape, for a cleaner and greener gas-based economy.”

bp chief executive Bernard Looneysaid: “Growing India's own production of cleaner-burning gas to meet a significant portion of its energy demand, these three new KG D6 projects will support the country's drive to shape and improve its future energy mix".

The next project, the Satellites Cluster, is expected to come onstream in 2021, followed by the MJ project in 2022.

Peak gas production from the three fields is expected to be around 30 mmscmd by 2023, which is expected to be about 25% of India's domestic production and will help reduce the country's dependence on imported gas.

Gas from R-Series field was previously expected in June but the Covid-19 lockdown disrupted the supply chain and the company could not complete the project in time.

R-Cluster will have a peak output of 12 mmscmd, while Satellites would produce a maximum of 7 mmscmd. MJ field will start production in the third quarter of 2022 and will have a peak output of 12 mmscmd.

Reliance in November last year auctioned the first set of 5 mmscmd of gas from the newer discoveries in the KG-D6 block by asking bidders to quote a price (expressed as a percentage of the dated Brent crude oil rate), supply period and the volume of gas required.

Considering the current average Brent price of $ 50 per barrel, the gas will cost around $4.2 per million British thermal unit.

Reliance has so far made 19 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 -- the largest among the lot -- were brought into production from April 2009 and MA, the only oilfield in the block was put to production in September 2008.

While the MA field stopped producing last year, the output from D-1 and D-3 ceased in February.

Other discoveries have either been surrendered or taken away by the government for not meeting timelines for beginning production.