RIL’s D-6 output to double following its tie up with BP
Filed Under: Business | Posted: 03/24/2011 at 1:48AM
Comments | Region: India
The much talked about tie-up between Mukesh Ambani run Reliance Industries Limited (RIL) and British Petroleum (BP) is speculated to generate more than double the current gas output in D-6 block to an estimated level of 120 million cubic meters a day; thereby allowing Reliance to sanction the resulting capital expenditure towards developing the country’s biggest gas field. Despite many an eyelids batting at project, Reliance is expected to boost its output and expand its recoverable resources significantly.
According to BP’s estimates, Reliance already has 15 trillion cubic feet of reserves, which can be doubled with the help of its technical assistance and guided expertise. D-6 block currently generates 50-55 million cubic meters of gas output per day. With the access to BP’s deepwater exploration technology, the output is set to increase to almost 240% of the current level.
Over the last year, the D6 block, in function since 2009, had developed some technical issues, rousing concerns among investors and trade analysts on the competency of the project. Reliance had a projected target of 80 mmscmd output by 2011, but it could only accomplish 60 mmscmd by the end of last year. The resulting alliance has now guaranteed for Reliance assured success in achieving the target. Given BP’s sub-surface development technologies and Reliance’s execution expertise, the pressure from D6 field can be boosted extensively.
The RIL-BP deal allows BP 30% stake in the 23 of Reliance’s offshore exploration blocks for an estimated $ 9 billion, in return enabling RIL to enter the big league alongside energy majors of the world. Reciprocally, BP will be able to break into newer markets, channeled by Reliance. The two companies have also agreed to form an equal joint venture to source and market gas in India. BP is expected to make a total investment of $20 billion in these ventures, making it one of the largest foreign investments (FDI) in the country.