RIL in talks with state refiners for D6 oil

Reliance Industries is in talks with state refiners for sale of crude oil it plans to start pumping from its eastern offshore KG-D6 block from next month.

The company is in advanced talks with Hindustan Petroleum Corp, Chennai Refinery and Kochi Refineries for sale of 34,000 barrels per day of oil it will start producing from the gas-rich KG-D6 block on Krishna Godavari basin from September.

"We do not intend to use the D6 oil in our Jamnagar refinery and are close to tying up sales with state-refiners," a company source said.

The company is investing $2.234 billion in developing the MA-1 and MA-2 oil fields in the predominantly gas-rich block.

Oil reserves in the block are estimated at 53.5 million barrels and production will last 11 years -- beginning with 20,000 bpd in first year and rising to 30,000 bpd in second year before beginning to decline.

Sources said the Aker Smart-1 floating production storage and offloading system (FPSO) is expected on the field any day now. It may take 4-6 weeks to install at the field and oil production will begin soon after.

The FPSO, contracted for $733 million, will help eliminate the need for piping the oil to the shore for onward transportation to refineries.

Oil tankers can directly load at the FPSO and carry the oil to the destined refineries.

Reliance is separately investing $5.2 billion in phase I of its gas field development plan, the first output of which is expected around the same time as oil.