The government on Tuesday approved Reliance Industries' $1.529 billion investment plan for developing four satellite fields in the flagging KG-D6 block after sitting on the proposal for months.
The investment plan, which will help boost falling output in the Krishna-Godavari Basin KG-D6 block, has been pending with the authorities for two years and it took some prodding from top government functionaries for it to be cleared.
The KG-D6 block oversight committee, which includes officials from the Oil Ministry and its technical arm, the DGH, met for the third time in three months today to finally approve the proposal, sources privy to deliberations at the so-called Management Committee (MC) meeting said.
The MC approval, which is the final approval an operator needs before beginning work, however, puts a cap on the cost of developing the four fields that surround the currently producing Dhirubhai-1 and 3 (D-1 & D-3) fields in the KG-D6 block.
The cost cannot vary by more than 15 per cent, they said, adding that the investment proposal was signed by the three partners in the block, RIL, UK's BP Plc and Niko Resources of Canada, and the representative of the Directorate General of Hydrocarbons (DGH), while the Oil Ministry official is likely to sign it in the next couple of days.
The MC had at its two previous meetings in November and December refused to approve the field development plan (FDP) for the Dhirubhai-2, 6, 19 and 22 (D-2, D-6, D-19 and D-22) fields after the government representative raised certain objections.
Sources said BP Chief Executive Bob Dudley last month wrote to Oil Minister S Jaipal Reddy stressing on the need for early approvals for the plan, without which one full year would be lost as the fair weather window in the Bay of Bengal only permits field developmental work between December and March.
The four fields can produce 10 million cubic metres of gas per day by 2016, which will help shore up output from the block, which has seen a 35 per cent decline in production in the past 15 months.
The MC had in its last meeting on December 2 refused to approve the investment plan, saying the proposal made in December, 2009, was based on the prices of that year and new rates needed 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 the rates would require several months and would lead to the loss of the weather window. As a compromise, RIL agreed to cap spending on the four fields at USD 1.529 billion, plus or minus 15 per cent.
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 sharply from 54 mmcmd, in March, 2010, to 32.94 mmcmd this month. Together with 6.86 mmcmd of associated gas produced from the MA oilfield in the same area, total production from the block amounts to 39.80 mmscmd.
The company had in July, 2008, submitted a FDP to exploit reserves of 1,708 billion cubic feet (bcf) in nine satellite gas discoveries (D-2, D-4, D-6, D-7, D-8, D-16, D-19, D-22 and D-23) in the D6 block at an estimated capex of USD 5.6 billion.
It later submitted an optimised development plan for four of the satellite gas fields (D-2, D-6, D-19 and D-22) at the end of 2009.
RIL estimated the in-place gas reserves of the four finds at 1,733 bcf, of which 626 bcf could be produced. However, the DGH trimmed the estimates to 1,342 bcf and 617 bcf, respectively.
RIL's proposal to invest up to USD 2.338 billion to produce about 15 mmcmd of gas from D-24, or the R-Series gas field, in its eastern offshore KG-D6 block is also pending approval. The field has gross in-place gas reserves of 1.64 tcf.
No comments:
Post a Comment