Reliance, BP start gas production from deep-water KG-D6 field

Reliance Industries (RIL) and BP said on Friday that gas production has started from the ultra-deep water gas field in the KG-D6 Block of the Krishna Godavari basin on the east coast of India.

The companies are jointly developing three gas fields in the offshore KG-D6 block. Of these, the R Cluster field — which is expected to reach plateau gas production of about 12.9 million standard cubic metres per day (mscmd) in 2021 — now becomes the first project to come online.

Located at a depth of more than two kilometers, the R Cluster is the deepest offshore gas field in Asia. The project was sanctioned in June 2017. The other two fields developed in the KG D6 block — Satellites Cluster and MJ project — were started in April 2018 and June 2019, respectively.

The three blocks, entailing an investment of around Rs 35,000 crore, are expected to cumulatively produce 30 mscmd by 2023, accounting for a quarter of the country’s domestic gas output. RIL is the operator of KG-D6 with a 66.7% participating interest while the remaining stake is held by BP.

“We are proud of our partnership with BP that combines our expertise in commissioning gas projects expeditiously, under some of the most challenging geographical and weather conditions,” Mukesh Ambani, chairman and managing director of RIL, said.

“Growing India’s own production of cleaner-burning gas to meet a significant portion of its energy demand, these three new KG-D6 projects will support the country’s drive to shape and improve its future energy mix,” Bernard Looney, chief executive of BP stated.

The KG-D6 fields have been given considerable pricing and marketing freedom via separate fiats over the last four years. The gas will be sold according to standard bidding norms for gas price discovery approved by the Cabinet in October. Currently, new gas fields (those other than the nominated fields) make up for less than fifth of the natural gas produced in the country, but these are expected to increase their share significantly in the coming years.

Indigenous natural gas production caters about 51% of the country’s requirements. With oil and gas production becoming increasingly unviable for energy companies, domestic natural gas output fell 2.8% year-on-year (y-o-y) to 85.5 mscmd in FY20, reversing the growth trend recorded since FY18. Domestic natural gas production fell 12.2% y-o-y to 16,373 million standard cubic metres in the April-October period, as operations became increasingly unviable for nomination fields with the government lowering selling prices.