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Reliance to ramp up KG output

Mumbai, Jan. 3: Reliance Industries is set to add up to 3 million metric standard cubic meters of gas per day (mmscmd) to its production from the KG-D6 fields, beginning this month.

Sources said RIL along with its partners BP Plc of the UK and Canada’s Niko Resources have spud the seventh well on the MA oil and gas field in the KG-D6 block. The well is likely to start production this month.

PTI reported that production from MA-8 could rise by 1 mmscmd to 3 mmscmd. At 3 mmscmd, MA-8 will be RIL’s biggest gas producing well in KG-D6.

Production at KG-D6 has dropped to around 12 mmscmd. The KG-D6 fields, which began production in April 2009, hit a peak output of 69.43 mmscmd in March 2010 before a fall in production, which Reliance said was caused by water and sand ingress.

The higher production follows the Centre allowing Reliance to sell natural gas at new prices from April. RIL, however, will have to give a bank guarantee to cover its liability if found guilty of hoarding.

The bank guarantee will cover the difference between the current gas price of $4.2 per million British thermal unit (mBtu) and the revised rate, which is expected to be about $8.4 per mBtu.

RIL’s shortfall in output from KG-D6 over the last four years stands at 154 million mmscmd. RIL had initiated an arbitration process after the petroleum ministry imposed a penalty of $1 billion for the shortfall.

 
 
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