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.
{{/usCountry}}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.
{{/usCountry}}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).