RIL sub-lets sole drilling rig to Malaysia's Petronas | business | Hindustan Times
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RIL sub-lets sole drilling rig to Malaysia's Petronas

business Updated: Aug 25, 2011 14:59 IST

Reliance Industries has sub-let the only deep-sea drilling rig it currently has to Malaysia's Petronas, leaving no rig deployed at any of its oil and gas blocks in offshore India.

Reliance has sub-let its Transocean-owned ultra-deep water drillship Dhirubhai Deepwater KG-2 to Petronas at least till the year-end, industry sources said.

Dhirubhai Deepwater KG-2, a high specification ultra-deep water drillship capable of operating in 12,000 feet of water and drilling to 35,000 feet, may drill two wells for Petronas off the coast of Brunei, beginning September, which may take up to four months to complete.

Following the move, Reliance does not have any operational offshore drilling rigs in Indian waters, sources said.

Reliance had in March 2010 received Dhirubhai Deepwater KG-2 from Transocean on a five-year contract at a day rate of $510,000, sources said, adding that the Mukesh Ambani-led firm is charging the same day rate from Petronas.

A company spokesperson did not reply to an email sent for comments.

Reliance has not drilled all of the wells it had committed in 2006 to win approval for investing up to $8.8 billion on its showpiece eastern offshore KG-D6 block.

Natural gas production from the block, at 47 million cubic metres per day, is 31% less than the target, a phenomenon which the oil regulator, the directorate general of Hydrocarbons (DGH), says was on account of not drilling the required number of wells.

Reliance has so far drilled only 20 out of the 22 wells committed by March, 2011, in the main Dhirubhai-1 and 3 gas fields of the KG-D6 block. As per its 2006 commitment, the number of producing wells should go up to 31 by the end of the current fiscal.

Sources said that without a drilling rig, it cannot drill any well this fiscal.

The DGH wants Reliance to immediately take up drilling of the 11 committed wells so as to raise output, which had in March 2010 touched 61 mmcmd. Production has since late last year declined amid falling pressure in the wells.

Reliance currently holds 90% interest in KG-D6, while the rest is with Niko Resources of Canada. It is selling a 30% stake in the block and 22 others to UK's BP Plc for over $7 billion.

In 2009, Reliance had sub-let another rig, Dhirubhai Deepwater KG-1, to state-owned Oil and Natural Gas Corp (ONGC) at a dayrate of $495,000 to 510,000 for four years (about Rs 3,195 crore).

ONGC was to pay a day rate of $495,000 to Reliance for the first 180 days and $510,000 from the 181st day onward.