Reliance Industries, BP Sanction Third Phase Of Integrated KG-D6 Development
Reliance Industries Ltd. and its partner BP Plc of U.K. Tuesday announced investment sanction for development of their deepest natural gas discovery in the flagging KG-D6 block by 2022.
“MJ is the third of three new projects in the Block KG-D6 integrated development plan and its approval follows sanctions for the development of ‘R-Series’ deep-water gas field in June 2017 and for the Satellites Cluster in April 2018,” the company said in a press statement.
RIL-BP did not give the individual cost of the three projects but said they together will cost an estimated Rs 35,000 crore. “These projects together, when fully developed, will bring about 1 billion cubic feet a day of new domestic gas onstream, phased over 2020-2022,” the statement said.
MJ gas find is located about 2,000 metres directly below the currently producing Dhirubhai-1 and 3 fields in the KG-D6 block. It is estimated to hold a minimum of 0.988 trillion cubic feet of contingent resource.
RIL and BP had in June 2017 announced an investment of up to Rs 40,000 crore in the three sets of discoveries to reverse the flagging production in KG-D6 block. R-Cluster will be first to come on stream, delivering gas in the second half of 2020-21 fiscal. The second set is called the Satellite Cluster. MJ is the third of these fields. A floating production system will be installed at MJ which will separate the gas and pipe it to the main trunk lines that take gas from existing fields to onshore.
The two firms have been able to save up to $1.5 billion of the cost by using existing infrastructure available in KG-D6 block.
As much as 70 percent of the infrastructure RIL set up more than a decade back to bring India’s first deep sea fields—D1 and D3—on to production are being utilised to produce gas from the three sets of new discoveries.
“Bringing these three discoveries to production, as promised in 2017, by leveraging the existing infrastructure has been the primary objective of the RIL-BP joint venture. The gas will satiate the increasing demand for clean fuel in the country, save foreign exchange and reduce dependency on imported gas,” RIL Chairman and Managing Director Mukesh Ambani said in the statement.
Bob Dudley, BP Group Chief Executive, welcomed the investment decision: “We are building an important upstream business in India, helping to supply the country's growing gas market. Working closely with RIL, we are efficiently developing discovered resources, with focused exploration to give options for the future.”
The output from D1 and D3 has fallen sharply from 54 million standard cubic metres per day in March 2010 to 1.3 mmscmd in the January-March quarter. MA field ceased to produce last year.
BP holds 30 percent stake in the block while the remaining 10 percent is with Niko Resources of Canada.
Besides MJ, four deep sea satellite gas discoveries -- D2, D6, D19 and D22 -- are planned to be developed together with D29 and D30 finds on the block. These six fields are called Satellite development. The third set is the D-34 or R-Series find.
The government had in 2012 approved a $1.529 billion plan to produce 10.36 mmscmd of gas from four satellite fields of block KG-DWN-98/3 (KG-D6) by 2016-17. The four fields have 617 billion cubic feet of reserves and can produce gas for eight years.
However, the companies did not begin the investment citing uncertainty over gas pricing. After the government allowed a higher gas price for yet-to-be-developed gas finds in difficult areas like the deep sea, RIL and BP decided to take up their development.
RIL-BP has kept the $3.18 billion investment plan for D-34 or R-Series gas field in the same block, which was approved in August 2013. About 12.9 mmscmd of gas for 13 years can be produced from D-34 discovery, which is estimated to hold recoverable reserves of 1.4 trillion cubic feet.
Other discoveries have either been surrendered or taken away by the government for not meeting timelines for beginning production.