After months of delay, the Government may on Tuesday approve Reliance Industries' $1.529-billion investment plan for developing four satellite fields in the flagging KG-D6 block.
The KG-D6 oversight committee, which includes officials from the Oil Ministry and its technical arm — the Directorate General of Hydrocarbons (DGH) — is slated to meet tomorrow to consider the approval for the field development plan (FDP) for the D-2, D-6, D-19 and D-22 fields surrounding the currently producing Dhirubhai-1 and -3 fields.
Sources privy to the development said the fields can produce 10 million metric standard cubic metres a day (mmscmd) by 2016 and will help shore up output from the block, which has seen a 35 per cent drop in output in the past 15 months.
The oversight panel, called the Management Committee, had in its last meeting on December 2 refused to approve the investment plan saying that the proposal made in December 2009 was based on the prices of that year, and new rates need to be worked out at the current prices.
Sources said RIL and its partners, UK's BP Plc and Niko Resources of Canada, felt reworking rates would require several months and would lead to loss of the four-month weather window in the Bay of Bengal that began this month.
Compromise
As a compromise, RIL agreed to cap spending on the four satellite fields at $1.529 billion, give or take 15 per cent.
It includes $30 million pre-development activity cost that RIL and BP have been insisting on taking up during the next quarter for pre-engineering and other studies.
RIL has so far made 18 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 but output has fallen to 32.94 mmscmd this month from 54 mmcmd, reached in March 2010. Together with 6.86 mmscmd of associated gas produced from MA oilfield in the same area, total production from the block is 39.8 mmscmd.
The company had in July 2008 submitted an FDP for nine satellite gas discoveries (D-2, D-4, D-6, D-7, D-8, D-16, D-19, D-22 and D-23) with an estimated capex of $5.6 billion and reserves of 1,708 billion cubic ft (bcf).
It later submitted an optimised development plan for the four satellite gas fields at the end of 2009.
RIL estimated 1,733 bcf of in-place gas reserves in the four finds, of which 626 bcf can be produced. However, the DGH trimmed down the estimates to 1,342 bcf and 617 bcf, respectively.
Its proposal to invest up to $2.338 billion to produce about 15 mmscmd of gas from D-24 or the R-Series gas field has been pending in its eastern offshore KG-D6 block. The field has gross in-place gas reserves of 1.64 trillion cubic ft.