Energy operators vying for success similar to RIL’s KG D6 block

The Krishna – Godavari oil and gas basin, developed by Mukesh Ambani owned Reliance Industries Limited (RIL), is somewhat of an aspirational pursuit for many energy operators across the country. KG-D6 development has been one of India’s biggest and most complex underwater installation campaigns. One of India’s largest sources of domestic gas for FY-11, RIL’s KG-D6 accounted for almost 35% of the total gas consumption in India. Currently, it caters to the demand from 57 core sector players including fertilizer, power, steel, petrochemicals and refineries.

The 8,100km² KG-DWN-98 / l (KG-D6) block lies off the east coast of Andhra Pradesh in the Bay of Bengal region. The first three discoveries made in this region, namely Dhirubhai-1, Dhirubhai-2 and Dhirubhai-3, have estimated gas reserves of approximately eight trillion cubic feet and, and besides D1 and D3 gas fields, MA oil discovery has proven to be a very substantial one.

Natural gas from Reliance Industries’ KG D6 field is estimated to have rendered Rs. 6,000 crore in savings for the government over the last year, while its fertilizer subsidy bill eased by almost Rs. 3,100 crore. This was a substantial benefit to the power and fertilizer companies, who are the foremost users of natural gas. KG D6 output has saved 32 per cent in fertilizer subsidy after urea making plants shifted from costlier liquid fuels to lighter and more cost effective gas inputs from RIL’s gas fields.

Analysts are of the view that following such large savings by the government the benefits are likely to trickle down to the end consumers. Many companies bid for deepwater assets hoping to experience success similar to that of KG D6, one of India’s most prolific natural resource finds. Often, operators commit much capital and time in developing gas field in hopes of similar result, but the expertise employed at KG D6 has so far been unmatched.

With RIL-BP deal now taking shape, it is likely that the production from the field will augment substantially with BP’s deep sea technical expertise at work.

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