News APP

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  gplay

This article was first published 9 years ago
Rediff.com  » Business » Reliance gas output from KG-D6 likely to improve: UBS

Reliance gas output from KG-D6 likely to improve: UBS

Source: PTI
September 23, 2014 16:53 IST
Get Rediff News in your Inbox:

An oil rigReliance Industries' eastern offshore KG-D6 gas output is likely to improve to 15 million standard cubic meters per day by second half of current fiscal as it completes work-overs on the main fields, UBS said.

Gas production from Krishna Godavari basin block has dropped to just over 12 mmscmd and RIL is carrying out workover on main Dhirubhai-1 and 3 gas fields.

In a research note, UBS said it expects RIL's "core petrochemical, refining and domestic exploration and production businesses to improve over the next two years".

"We think an increase in gas price hike is likely soon, and the government focus to encourage domestic production and problems with KG-D6 should be resolved shortly and gas production visibility should improve," it said.

RIL's $13 billion capex, including $8.5 billion in expansion of petrochemical units, was on track.

Also refinery cost advantages will increase with pet-coke gasifer becoming operational by 2016, enabling steady $8-plus refining margin.

"KG-D6 gas production to improve further to 15 mmscmd with work-over at D1-D3 complete by 2HFY15," it said, adding that a gas price increase to $6.5-7.0 per million British thermal unit by next month from current $4.2 will drive investments for developing R-series, MJ1 and commerciality approvals for satellite fields in KG-D6 and discoveries in block NEC-25.

RIL has two refineries in Jamnagar, Gujarat, with a capacity of 1.2

million barrels per day.

It also has an integrated petrochemical facility and a 60 per cent interest in KG-D6.

It has a presence in shale gas in the US, as well as retail and telecom services, where it is in the process of scaling up operations over the next two to three years.

"We expect refining margins to hold into 2014 and 2015 with some closures and better demand. Petchem spreads are likely to be under pressure, but we believe capex-led volume growth will be a key driver for profitability along with its cost advantages," it said.

On E&P, UBS expected most issues to be resolved, positive reforms to continue, and implementation to pick up with the new government focusing on increasing domestic production.

An appreciating currency would, however, be a dampener.

"We expect RIL's core petrochemical, refining and domestic E&P businesses to improve over the next two years.

"We think an increase in gas price hike is likely soon, and the government focus to encourage domestic production and problems with KG-D6 should be resolved shortly and gas production visibility should improve," it said.

Get Rediff News in your Inbox:
Source: PTI© Copyright 2024 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
 

Moneywiz Live!