KG-D6 may resume oil production by Jan-end, gas next month

New Delhi, Jan 12 (PTI) Reliance Industries is likely to
restart crude oil production from its Eastern Offshore KG-D6
block by the month-end, while natural gas will start flowing
next month, oil regulator DGH said Monday.

Reliance, which had started crude oil production from the
predominantly gas-rich KG-D6 block in September 2008, had on
December 9 shut the oil field following equipment failure.

"In our assessment, crude oil productions should start in
next 15-20 days. You can say it will start flowing by month
end," DGH Director General V K Sibal told reporters on
sidelines of the Petrotech Conference here.

Reliance was producing 10,000 to 12,000 barrels per day
when the production was stopped.

Sibal said natural gas from KG-D6 would start "any time
between mid-February to end-February".

"We estimate Reliance will be able to raise the output to
30-40 million standard cubic meters per day within a short
time," he said.

Reliance CEO and President of Oil and Gas PMS Prasad, on
January 9, had written to the oil ministry stating that gas
output from KG-DWN-98/3 or KG D-6 fields in Krishna Godavery
basin of the east coast would start by next month-end "subject
to weather and marine conditions".

In response, Prasad wrote to the ministry that Reliance
would be ready for gas production by end-February "subject to
weather and marine conditions."

Initial output from KG-D6 would be in the range of 15 to
25 million standard cubic meters per day, which would be
ramped up to 40 mmscmd in four to five months and to 55 mmscmd
before the end of the year. (

With the Government giving the fertiliser and power
sectors the topmost priority for sale of KG-D6 gas, the output
would help eliminate power deficit in Indian eastern state of
Andhra Pradesh, and western states of Maharasthra and Gujarat.
It would also reduce fertiliser subsidy as KG-D6 gas would be
priced at USD 4.20 per million British thermal unit, half the
price of alternate feedstocks like naphtha.

However, Reliance may not be able to sell the gas as the
Mumbai High Court has restrained the company from selling fuel
to any company other than Anil Ambani-led Reliance Natural
Resources Ltd (RNRL) and state-run NTPC Ltd.

RNRL by virtue of a family agreement and the state-run
firm from an unsigned contract of 2005, claim 40 mmscmd gas
from D6 and has taken Reliance to court to get their share.

The official said the Indian government has intervened in
the case to get the stay on gas sales lifted so that
industries starving for gas get the fuel and arrest the
economic slowdown.

The government, which had last month withdrawn affidavits
filed in the Mumbai High Court on the issue, will now make a
written statement in the court.

"Our intervention is limited only to get the stay on gas
sales vacated," Petroleum Secretary R S Pandey had recently
stated.

"We were told by our lawyers that by virtue of our
affidavits, the other party (RNRL) was seeking to cross-
examine the person who signed those and this could have
delayed a verdict on the issue. So we withdrew the affidavits
and will now make written submission through our lawyers."

Unlike an affidavit, the written statement does not need
to be signed by any government official and can be made by the
Government lawyer under his name. PTI