RIL May More Than Double Gas Output by 2018

According to a report published by Bernstein Research, Reliance Industries (RIL) may more than double natural gas production to 50 million standard cubic meters per day by 2018 if gas prices are increased from April, news agency Press Trust of India reported Monday.

Early last year, India hiked price of all domestically produced natural gas to $8.4/mmBtu from $4.2/mmBtu. Higher prices would come into effect from April. However, Reliance was excluded from charging new prices until the company either made up for the shortfall in output during past three fiscals, or it is proved that the company was not responsible for production falling below targets.

In December the government allowed RIL to charge new price provided the firm gave a bank guarantee to cover its liability if gas-hoarding charges are proved.
     
As per Bernstein Research report , the projected output will come from satellite fields in the eastern offshore KG-D6 block as well as North East Coast block NEC-25, off the West Bengal coast, reported Press Trust.

"Dwindling gas production has given way to more expensive LNG imports, which has partly grown to fill the void left by declining domestic gas production. For India, the choice is increasingly between raising gas prices or having no gas. In short, we do not believe that India has an option," Press Trust quoted from the report.
     
RIL currently produces about 11.7 mmscmd from the KG-D6 block, down from a peak output of 69.43 mmscmd hit in March 2010 before water and sand ingress shut down well after well, said Press Trust.
     
"With gas price reform imminent, further exploration of the deeper syn-rift play across KG-D6 and the broader margin will become attractive again. Low gas prices remain the barrier to exploration offshore India and over the past few years, there has been a hiatus in exploration drilling," the
report said.

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