Reliance’s D6 gas goes on tap

Right on schedule, Reliance Industries Ltd has started pumping natural gas from its massive Krishna-Godavari deep-sea field in the Bay of Bengal. Petroleum secretary R S Pandey told reporters in Kolkata that the company was producing 2.5 mmscmd of natural gas since last evening, and the output may double in a day.

"The gas from offshore is being received at our world class onshore facility at Gadimoga village in the East Godavari district of Andhra Pradesh, and delivered to the east-west pipeline of Reliance Gas Transportation infrastructure," RIL said in a release to the stock exchanges.

Fertiliser companies, which have been given priority on this gas by an 'empowered' group of ministers, will start getting gas supplies from Reliance in four to five days, Pandey said. However, supply would depend on proximity, as the plant farthest from the field would get supplies only after 15 days.

Reliance, which has invested $8.84 billion for the development of the D1 and D3 fields in its D-6 block, said last month the company would initially produce 10-12 mmscmd and raise it by about 10 mmscmd a month, reaching its peak production of 80 mmscmd by the end of this year.

"At peak level it would amount to 44 per cent of the country's current oil and gas production taken together," Pandey said. He added that at a price of $4.2/mmBtu, the project had a potential to generate $42 billion in revenue for the government over its estimated life of 11 years.

Pandey said gas production from the deep-water project would encourage potential investors in the auction of 70 blocks, to be launched on 9 April. India will offer 24 deepwater, 28 shallow water and 18 land blocks in the next round.

However, the government's tight-fisted approach to the sector is certain to deter many potential investors. As Cairn India chief executive Rahul Dhir said earlier this week, the government's promptness in restricting Reliance's marketing freedom will act as a damper.