 "ONGC, Reliance, British Gas to abandon Tapti gas field")
The field consortium partners are Oil and Natural Gas Corporation (ONGC) with 40 per cent stake and British Gas India and Reliance Industries with 30 per cent stake each, respectively.
In a presentation to analysts after the company's fourth-quarter results, Reliance Industries (RIL) said, "The JV partners witnessed poor performance from the newly drilled wells. Re-evaluation of the field showed a significant drop in reserves. The field is moving towards early abandonment."
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The JV (joint venture) partners have submitted their proposal to the Ministry of Petroleum and Natural Gas for early abandonment of the field. "The proposal is under review with the Government of India," RIL added.
The Panna and Mukta fields are primarily oilfields while Tapti is a gas field. These are located in the offshore Bombay basin. The production sharing contract for the fields was signed in 1994. While the Panna and Mukta fields began production in December 1994, the Tapti field began production in 1997-98.
During FY2014, the Tapti field produced 0.28 million barrels of condensate and 27.3 billion cubic feet of natural gas, a decline of 48 per cent and 38 per cent respectively year-on-year. "The decrease is due to the underperformance of newly drilled wells in the previous year as well as on account of natural decline in the existing wells," RIL said.
The Panna and Mukta fields produced 7.4 million barrels of crude oil and 65.4 billion cubic feet of natural gas in FY2014, a decline of 9 per cent and 8 per cent respectively year-on-year. The decrease in production was due to a 17-day shutdown for field maintenance activities and commissioning of a new single-point mooring (SPM) system, coupled with natural decline.
"During the year, the JV completed six wells in Panna, which has resulted in additional volumes to partially arrest the production decline. As part of the Mukta field development, the Mukta-B development plan was submitted and approved by the management committee. The production from Mukta-B development is likely to start in FY16," RIL added.
While gas from Panna-Mukta is sold at $5.73 per million metric British thermal unit (mmBtu), gas from Tapti is sold at $5.57 per mmBtu.
Consortium sources said the abandonment or decommissioning of the field would cost around $300-350 million and the filed would be abandoned by June 2015.
RIL has been facing a tough time with regard to its domestic exploration and production business. Its flagship KG block has been seeing a sharp decline in natural gas production over the years due to geological complexity, natural decline in the fields and higher than envisaged water ingress.
"D6 block production is averaging 14 million metric standard cubic meters per day (mmscmd), and will sustain at 15 mmscmd levels over FY15, despite workover operations," ICICI Securities said in its report post the RIL result.
To manage assets better, last year RIL had recast its upstream oil and gas business by splitting it into three units - conventional, coal bed methane and shale gas. "RIL's upstream business has been restructured," RIL had said in its annual report for 2013 adding, "In this way, the risks and dynamics of each sector are clearly understood and distinctly managed." During the financial year, RIL relinquished four blocks as part of portfolio rationalisation. Currently, the company holds six blocks other than KG-D6, Panna-Mukta-Tapti and two CBM blocks. In its international portfolio are two blocks in Yemen and one in Peru. Last month, it won two offshore blocks in Myanmar's offshore bidding round for 2013.