Reliance Industries Ltd (RIL) wants a further rise in deepwater gas prices from the current $4.2 per million British thermal unit (mBtu).
This price was fixed by the government in 2007 for the gas produced from RIL's D6 field in the Krishna-Godavari basin for five years from the start of production. The price is, therefore, not expected to be revised before April 2014.
“Considering the current oil and gas prices and the kind of investment risk involved in exploration of deepwater gas, the price should be higher. We made presentations from time-to-time regarding this. I would not like to comment on what should be the price, but it has to be much higher,” said Atul Chandra, president (operations), RIL, during the sidelines of a CII meeting here.
“About five years ago, the drilling of a well would have cost us around $30 million. it has increased to $100-125 mn. Current prices certainly hurt and affects more aggressive expansion plans,” he said.
Analysts agreed the higher cost of project development and production for deepwater gas should entail a higher price for the produce. “There is little chance that experienced exploration companies would be motivated to enter Indian deepwater,” PricewaterhouseCoopers' Deepak Mahurkar said.
