Reliance Industries (RIL), India’s largest company by market capitalisation, will begin producing gas from its Krishna- Godavari (KG) field, which is off the country’s east coast, “by December” this year, a senior executive said today.
The date indicates the operational readiness to start production but actual delivery of the gas can begin only after the Bombay High Court, which is currently hearing the case between the Ambani brothers, pronounces its verdict.
An earlier court order prohibited Mukesh Ambani-controlled RIL from entering into any agreement for sale of gas from the KG field.
In another development, RIL will begin producing oil from the same field next month and has begun discussions with the Chennai Petroleum Corporation (CPCL), a subsidiary of Indian Oil Corporation Ltd (IOC), the country’s largest refining company. There is no ban on RIL to produce oil from the field. However, the size of oil reserve in relation to gas is very small.
“We are now focussed on producing gas. Crores of rupees have been invested and the company is keen on bringing the gas to production,” the RIL official said, requesting anonymity. Earlier, RIL said it would begin producing gas from the field by June. It later revised this to say that production would begin in the second half of 2008-09.
The company discovered gas in the D6 block in the Krishna-Godavari basin off the coast of Andhra Pradesh in 2002. At its peak, 80 million cubic metres per day (mcmd) of gas will produced, which can wipe out the gap between demand and supply in the country. RIL is fighting Reliance Natural Resources (RNRL), a company promoted by Anil Ambani, in the Bombay High Court over supply of 28 mcmd of gas to the younger brother's company. “The court case could delay production of gas,” a Delhi-based analyst said.
It depends on whether the Bombay High Court’s stay order is lifted,” a Delhi-based analyst said. RIL officials, however, say that the company would be ready to produce gas from December. “There are a few technical and operational glitches. All machinery and capital goods have been procured,” said another RIL official.
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With the arrival of the monsoon in the Bay of Bengal, where the block is located, work at the oil and gas block is getting disrupted, the official added. “There are people still working at the block, but only a few hours every day,” he said.
The directorate general of shipping had earlier said that offshore vessels that are more than 25 years old will not be allowed to operate in India’s waters. “That delayed our work for quite sometime,” said the official. The order has since been withdrawn.