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Govt unconvinced by RIL's reasons for dip in D6 output

BS Reporter/New Delhi 10 Oct 12 | 12:08 AM
 Reliance Industries Ltd

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The government has said it is not convinced by the geological reasons cited by Reliance Industries (RIL) to justify the declining output from its KG-D6 gas field, the largest in the country. Against a projected output of 80 million standard cubic metres a day (mscmd), the field is producing only 26 mscmd.

Speaking to reporters here, Petroleum Minister Jaipal Reddy said, “The RIL consortium has told us it would not be able to produce as much as it had projected, owing to geological complexities. The ministry is not convinced. This is being examined."

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Canadian company Niko Resources has 10 per cent stake in the D6 block in the Krishna Godavari basin, while operators Reliance and BP have stakes of 60 per cent and 30 per cent, respectively.

On whether the consortium might have to shut the fields in 2015-16, Petroleum Secretary G C Chaturvedi said, “That is a fear." For long, RIL has urged to reflect international gas prices, the price of KG-D6 gas be raised three-fold from the current $4.2 per million British thermal unit. The current price was fixed for a five-year period ending March 2014.

RIL had stated for the quarter ended June 30, gas production from the KG-D6 field was 33.1 per cent less than in the previous quarter. “The reduction in production was due to reservoir complexity and natural decline," it had stated.

RIL says significant efforts towards augmenting production from KG-D6 have been undertaken in the first quarter. To enhance gas recovery from existing fields, the company plans to submit a revised field development plan (RFDP) for D1-D3. It also plans to pursue approval of the RFDP for D26 (MA) submitted in the previous quarter. Also, to expedite development projects of other discoveries, RIL is preparing development plans, based on an integrated concept it plans to submit in the quarter ending December.

Chaturvedi said RIL wanted to explore satellite fields to increase production, adding clarifications were being sought about these. In 2006, RIL had proposed to drill 31 wells capable of producing 80 mscmd of gas by 2012. However, so far, the company has drilled only 22 wells on the fields. Of these, only 18 have been put on production, while the four wells drilled in 2011 have not been connected to the production system, as these have uneconomical reserves.

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