Reliance Industries Ltd, the country's largest private sector company, has discovered "significant" amounts of gas in an offshore block in Saurashtra.

Reliance has intimated the Directorate General of Hydrocarbons (DGH) about the discovery, a source told Business Standard. V K Sibal, director general of hydrocarbons, could not be reached for comment.

Reliance is the operator of the block with a 70 per cent stake, while Oil India Ltd has the remaining 30 per cent stake. The consortium won the block under the New Exploration and Licensing Policy.

Reliance is already a gas-rich company, sitting on an estimated 11.2 trillion cubic feet (tcf) of reserves in the Krishna-Godavari (K-G) basin, discovered in 2002. "The gas discovery in the Saurashtra block is not as big as the K-G basin one. However, initial studies show it has good potential," the source said.

Reliance officials declined to comment on the issue.

Gas production from the K-G basin is likely to start in June 2008 and reach a peak output of 80 million cubic metres per day (mscmd) by July 2009. The company has also discovered gas in a coal block in Madhya Pradesh, with estimated reserves of 3.76 tcf.

The Mukesh Ambani-led company also holds a 30 per cent stake in the Panna-Mukta-Tapti gas fields in the western offshore region. The field, in which Oil and Natural Gas Corporation (ONGC) holds a 40 per cent stake and British Gas 30 per cent, currently produces 13 mscmd of gas, besides 29,000 barrels of oil per day.

In all, Reliance has a stake in 34 exploration blocks in the country.

Besides Reliance's K-G basin discovery, ONGC and Gujarat State Petroleum Corporation have discovered gas on the east coast.

The government estimates a doubling of gas demand in the country from 195 mscmd to 391 mscmd by 2025. Analysts expect almost 30 per cent of liquid fuels like petrol, diesel and LPG to be replaced by gas over the next five years.