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RIL not to up KG output till safety inspection over

Reliance Industries today said it will not increase production from the KG D6 fields till a review of the safety procedure is complete.

business Updated: Jul 27, 2010 22:06 IST

Reliance Industries on Tuesday said it will not increase production from the KG D6 fields till a review of the safety procedure is complete.

"We are running a review of the full reservoir, on our safety procedures. It started some time back and will take some more time. Till then we will not increase production from the KG D6," RIL Chief Financial Officer Alok Aggarwal told reporters while announcing the Q1 results.

It can be noted that oil giant BP has been fighting in vein to cap the worst oil spill in history off the Florida cost in the Gulf of Mexico since late April. The looming oil spill has already cost BP more than USD billion and has forced the company to set apart a USD 20 billion escrow account to pay possible claims.

Backed by strong performance of oil and gas exploration and production and refining business, RIL has reported its highest ever quarterly revenue and net profit in June quarter.

The company's net profit has touched Rs 4,851 crore, which is a 32.32 rise over the year ago period while its net turnover is up by nearly 85 per cent to Rs 58,950 crore.

The gross refining margin which was under pressure due to higher raw material cost last quarter, hasn't gone up to the expectation of analysts, but made a decent USD 7.3 per barrel in Q1 compared to USD 6.8 in the same period last year and USD 7.5 in the previous quarter (Q4 of FY10).

The benchmark Singapore GRM is at USD 3.7 per barrel in this quarter compared to USD 4.9 per barrel in Q4 of FY10. "Though there was some pressure on our GRM, it is just down by 20 cents compared to the previous quarter while the benchmark Singapore GRM is down by USD 1.2 at USD 3.7 per barrel," Aggarwal said, adding the GRM will be almost the same for the next three quarters if not better.

The petrochemical business which saw a marginal rise in revenue compared to the year ago period is down marginally compared to the last quarter previous fiscal. "The margins were lower in petrochem business compared to last year. More over we had to reduce our production due to shut downs of our plants in Hazira and Nagothane," Aggarwal said.

In the petrochemical business the capex will be based on the projects announced, he said. Apart from this, the company will spend a capex of USD 1.5 2 billion for the whole year, mostly in E and P, he said.

Majority of its export is now shifted Asian countries from North America and Europe. RIL is now concentrating more on shale gas as it is the fastest growing energy source and in the next ten years it will be largest source of energy in North America, Aggarwal said.