Reliance plans $400 mn jetty in Kakinada

Likely to partner Chevron in midstream, city gas projects.

Reliance Industries, which has discovered gas reserves of nearly 14 trillion cubic feet in the Krishna-Godavari basin off the coast of Andhra Pradesh, is building a gas-receiving jetty in Kakinada.

The jetty, estimated to cost $300-400 million, will receive the gas from the company's Dhirubhai-6 block and feed it to the proposed pipeline network the company plans to lay from Kakinada.

"Huge infrastructure is going to come up in Kakinada, from where our pipelines will arise. Now that talks with Chevron are under way, the pipelines to western India, Bengal and Chennai will come up soon," a senior Reliance executive said.

Work on the jetty is already under way. Afcons Infrastructure is carrying out the construction.

The Mukesh Ambani-controlled company is planning to lay a network of pipelines from Kakinada to market the gas from the K-G basin to different parts of the country. The pipeline projects have been held up as there are no definite marketing contracts yet.

The Reliance executive said the company was likely to set up a marketing joint venture with the US-based oil major Chevron. Chevron's Chief Executive Officer David O'Reilly is on a four-day visit to India, and a slew of agreements was expected to be signed, the executive added.

Reliance struck gas in the D-6 block, 55 km off the Andhra Pradesh coast, in 2002. The block is estimated to produce up to 80 million standard cubic metres of gas a day at its peak, or more than half of the country's demand for natural gas. The Mukesh Ambani-controlled company owns 80 per cent in the block.

"Chevron is also interested in partnering us in the city gas distribution projects. Another partnership in the exploration and production business in the K-G basin is more or less assured," the official said. The partnership in the deep-water K-G basin block would entail Chevron providing technology to Reliance.

Reliance has applied to city gas distribution licences in 100 cities across the country.

The estimated cost of setting up a distribution network in a single city is around Rs 200 crore.

In April last year, Chevron bought 5 per cent stake for $300 million in Reliance Petroleum, the group company implementing the 29 million tonne per annum refinery in Jamnagar in Gujarat.

The US-based company has the option to raise its stake to 29 per cent. "They are seriously considering raising stake in RPL. An announcement could be made soon," another Reliance executive said. Reliance board meeting is scheduled for February 24 during which some of the fund-raising proposals are likely to be discussed.