Jaipal Reddy promises fast nod for RIL's investment plans

Reliance Industries and BP have dropped a bombshell by claiming that gas production at the KG-D6 could stop in 2015. Sources say that RIL and BP have made it clear to the oil ministry that production from India's largest gas find will continue to fall all the way to zero unless the government immediately gives nod to their capex plan, reports Nayantara Rai of CNBC-TV18.

Also Read: RIL asks GoI to okay FY13 capex to avoid shutdown at KG-D6

Reliance and BP have said that production could fall to the zero level from the D1-D3 blocks. Currently, KG-D6 production is languishing at historic lows of 30 mmscmd. Both the companies say that they can undertake certain activities to curtail this decline of gas production. These activities will cost USD 225 million, which Reliance and BP want to undertake that capex this year itself, so they are seeking immediate approval.
Trying to strengthen their case, RIL and BP have argued that by undertaking these activities they can bring 0.6 tcf additional as production from the D1-D3 blocks.
In addition to that, they are also seeking an approval to invest USD 318 million at a separate MA oil field in the KG-D6, which will add 0.2 tcf to the production.
Net-net they want a capex plan of USD 543 million for FY13 to add 1 tcf. Earlier on June 15, RIL wrote to the oil ministry that they can increase the KG-D6 gas production by 30-35 mmscmd, almost double, but only at market aligned gas prices.
The oil ministry has issued a press release, which states that the two parties have met and they have agreed with Reliance to recommend a declaration of commerciality of certain wells in NEC-25 KG-D6.
However, the press release is silent about the discussion that took place in the meeting between petroleum minister Jaipal Reddy, RIL's PMS Prasad and BP's Sashi Mukundan.
 
The release states that they have agreed upon two issues, one is declaring commerciality at NEC-25 in different wells at the KG-D6 and in the other issue Jaipal Reddy has asked RIL to submit its report and accountings of the KG-D6.
We had earlier reported that GAG is now doing a second audit of the KG-D6 beginning from FY09. So, whether RIL will play ball or will it submit those records is something we will have to watch out.