Reliance Industries, in collaboration with its UK partner BP plc, is planning to invest around Rs 6,000 crore by 2016 to sustain and enhance gas recovery from the key gas fields within the eastern offshore KG-D6 block.
During the India Energy Congress, BP India head Sashi Mukundan revealed that the two companies are also focused on developing 3-4 trillion cubic feet of gas discoveries located off the eastern coastline.
Mukundan emphasized the importance of improving oil recovery, noting that even a 1% increase could contribute nearly 8% to India’s existing proved reserves, translating to approximately 450 million additional barrels of reserves.
He highlighted the challenges of extracting gas from complex reservoirs, stating, “An investment of Rs 5,000 to 6,000 crore during the 2014-2016 period will facilitate the introduction of world-class technologies for deep-water gas extraction in India, aimed at sustaining production and enhancing recovery from the current fields.”
Gas production from the Dhirubhai-1 and 3 (D1&D3) fields in the KG-D6 block has significantly decreased from around 54 million standard cubic meters per day in 2010-11 to just over 8 mmscmd, primarily due to unexpected issues with water and sand ingress that have led to the shutdown of multiple wells.
In addition to the KG-D6 block, the NEC-25 area off the coast of Odisha also contains several discoveries that the two companies are concentrating on.
“We are developing 3-4 trillion cubic feet of discoveries in new fields over the next several years,” Mukundan stated.
He urged the government to facilitate and support the industry to attract investment in this capital-intensive and high-risk sector.
Mukundan asserted that the government should act as an enabler, creating a conducive environment that allows participants to operate at scale and enhance competitiveness.
“This industry globally is accustomed to taking on significant risks, including market fluctuations, often without government assistance,” he explained, while advocating for a supportive policy and regulatory framework that permits freedom in marketing and pricing with minimal intervention.
He pointed out that while the government bears no risk, it still benefits from taxes, royalties, profit shares, and overall economic growth.
India’s energy consumption is growing at an unprecedented rate, with hydrocarbon demand projected to increase by 120% to over 1,100 million tonnes of oil equivalent by 2035.
“The nation must carefully consider its options and strategically align its energy mix,” he added, highlighting the lucrative opportunities within India’s oil and gas sector that could attract numerous investors.
Mukundan stressed the urgency of establishing integrated gas players to become the future energy providers necessary for building a gas-based economy.
In light of the global slump in oil prices to a five-year low, he pointed out the critical need for investment in exploring new oil and gas territories, developing existing reserves, increasing output from current fields, and expanding refining, petrochemical, and marketing operations on a global scale.
“Failing to adapt will only exacerbate the sector’s decline, leading to higher imports, decreased competitiveness, and balance of payments challenges,” he warned.
