Reliance Industries Ltd (RIL) on Monday said the development of smaller gas fields in the Krishna-Godavari (KG)-D6 block is economically unviable at the current price of $4.20 (Rs 189) per million metric British thermal unit (mmBtu) and it may seek a rate of at least $6 (Rs 270) per mmBtu in 2014, when the fields are ready for production.
RIL reported 18 gas finds in the eastern offshore of KG-D6 block, of which two —Dhirubhai-1 and 3 —were put into production from April, 2009, for $8.8 billion.
The company is working on an integrated development plan for the rest, but wants a price higher than the $4.2 per mmBtu paid for gas from Dhirubhai-1 and 3. “It is absolutely not viable to develop smaller fields at current prices,” said PMS Prasad, executive director, RIL.
The smaller fields are proposed to be developed as a common pool, using existing facilities of the Dhirubhai-1 and 3 fields. RIL was in the process of preparing a multi-billion dollar integrated development plan.
RIL had in 2008 submitted plans to the government to invest $5.9 billion to develop nine satellite fields, but last year pruned the list to just four, as the current price of $4.2 per mmBtu did not justify such a huge investment.
The fields will start producing in 2014, the year when the price of $4.20 per mmBtu expires. The Centre had approved $4.20 per mmBtu in September 2007 as the price of gas from Dhirubhai-1 and 3 for five years, which was to be reviewed at the end of this period.
Though Prasad refused to speculate on the price that RIL would seek for marginal fields and the revised rates for fields currently under production, sources said that $6-7 per mmBtu is the rate RIL may be looking at. RIL may go in for a common rate for both fields (current as well as small ones).