A day after the news broke on the Reliance Industries Ltd (RIL) reaching a new dip in gas production in the next financial year, officials said the company anticipated a further fall to 22.6 million standard cubic metre a day (mmscmd) in 2013-14 from the current production of about 35 mmscmd.
Production is expected to drop to about 27 mmscmd by April-May this year owing to sand or water entering the wells. The company has informed the Directorate General of Hydrocarbons that a further fall from KG-D6 block is expected in the following year.
RIL, that is selling gas at a government-determined price of $4.2 a million British thermal unit, is also expecting a hike in the price in 2014. RIL is the operator of the block in the Krishna Godavari basin, with 60% stake. BP bought another 30% from RIL while Niko Resources is the original partner with 10% participating interest in the block.
According to the projections, about 14 mmscmd is expected to be produced from D1 and D3 gas fields while another 8.6 mmscmd is expected from the MA field in the same block. RIL began production from KG-DWN-98/3 or the KG-D6 block in April 2009.
Production from the block reached about 30 mscmd within months of starting production and touched 61.5 mscmd in March 2010. Today, D1&D3 produce about 27.5 mscmd and the MA another 7 mscmd.
The official said output from KG-D6 was short of the 70.39 mscmd (61.88 mscmd from D1&D3 and 8.5 mscmd from the MA field) level envisaged in the field development plan approved in 2006. Production was scheduled to touch 80 mscmd by April 2012.
The fall in production has forced the government to order supply cuts to non-priority sectors in May 2011. A petition filed by Welspun Maxsteel, Vikram Ispat and Essar Steel challenging the order is pending in the Supreme Court.
RIL has so far drilled 22 wells on Dhirubhai-1 and 3, two of the 18 gas finds in the KG-D6 block that have been brought to production. Of these, five have stopped production due to water/sand ingress. The MA oilfield in the same block had seen one out of the five wells cease production due to the same reason.
RIL scrip on the Bombay Stock Exchange closed 1.43% down at Rs 836.05 a share on Tuesday.