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RIL’s petro merger a big financial boost for group
Mukesh Ambani-controlled Reliance Industries Ltd, whose board is set consider a mammoth merger with subsidiary Reliance Petroleum Ltd, is poised to get a big boost to its financials as it advances the ramping up of natural gas production at its developed field in the Krishna-Godavari basin, reports Rajendra Palande.
Mukesh Ambani-controlled Reliance Industries Ltd (RIL), whose board is set consider on Monday a mammoth merger with subsidiary Reliance Petroleum Ltd (RPL), is poised to get a big boost to its financials as it advances the ramping up of natural gas production at its developed field in the Krishna-Godavari basin.
The start of commercial production of 40 MMSCMD (million metric standard cubic metres per day) of gas is just a couple of weeks away and the plan is to reach the full capacity by the end of 2009, cutting down by half the time earmarked to hit 80 MMSCMD.
The achievement of full capacity gas production will add almost Rs 50,000 crore to the nearly Rs 1,50,000 crore annual revenues of RIL.
“The quicker we go to 80 MMSCMD, the better,” PMS Prasad, the president of RIL’s petroleum unit, told visitng reporters at Kakinada.
RIL has invested $5.2 billion in the KG D6 basin against an estimated total of $8.8 billion. Prasad said RIL expects the gas business to break-even in the next 4 to 5 years.
The peaking of production from the D1 & D3 fields will nearly fill the current demand-supply gap. Existing consumers in the fertiliser, power and industrial sectors face a shortfall of an estimated 100 MMSCMD of natural gas. Their gas-based projects are either lying idle, under-utilised or consuming costlier fuels.
Only 3 per cent of RIL’s D-6 7,600-square km deepwater block has been explored so far. A 1,400 km-pipeline to Gujarat will transport processed gas from an onshore terminal, but 70 per cent of the gas is meant for Andhra Pradesh.
The gas produced would be sold at $4.20 per MMBTU (million metric british thermal units) for the first five years as stipulated by the government.
“RIL has captive requirement of 18 MMSCMD but has not got even 1 MMSCMD. We pay ONGC $5.5 per MMBTU" said Prasad.
