HPCL's Vizag refinery in Andhra Pradesh was to receive the consignment of 65,000-70,000 tonne on November 17, but the ship carrying the oil could not offload it due to bad weather. The MA-1 oilfield started production in September. The company sold the first consignment to HPCL at a $5.34 a barrel discount to Nigerian crude grade Bonny Light.
The Union government today filed a fresh affidavit in the Bombay high court, which is hearing a dispute over supply of gas from Krishna Godavari basin, stating that any sale price less than $ 4.2 per mmBtu is not compatible with decisions taken by a ministerial panel.
In addition to undertaking to validate prospects identified by the joint venture, GCA employed a play-based exploration methodology on the D3 block to address both the current prospect inventory and the 'yet to find' resource potential. In D3, GCA estimated 9.5 Tcf of inplace reseves. D-3 and D-9 blocks in the same KG basin may hold 9.5 Tcf and 10.8 Tcf of gas reserves respectively, UK-based Hary Oil and Gas Plc said.
Lawyer T S Doabia told the court the government's approval was necessary for the rate at which RIL sells the gas to other private parties. The division bench of Justices J N Patel and K K Tated pointed out that, according to RNRL, the government stated in Parliament it would not be fixing the gas price, except for its own share. When told this was not contrary to what Doabia was saying, the court asked him to file an affidavit, clarifying the government's position.
UBS Investment Research in its latest report estimated that ONGC and GSPC may get at least $5.5 per million British thermal unit for natural gas they will pump out from their respective Krishna-Godavari basin blocks. RIL is to get a fixed price of $4.2 per mmBtu for gas it would produce from Dhirubhai-1 and 3 fields in KG-D6 block from December-January, for the next five years.
The Bombay high court on Monday suggested that the warring Ambani brothers could approach an independent body to resolve their dispute relating to supply of natural gas from the Krishna-Godavari basin. "The MoU is not able to resolve the issue and we would suggest both the parties to approach an independent body for the same," observed justice J N Patel.
The discovery was made in block KG-DWN-2003/1, lying about 50 km from Machilipatnam in Andhra Pradesh, a company statement said. The block was awarded to Reliance Industries in the fifth round of auction under the New Exploration Licensing Policy.
The company has already received an approval to spend Rs 50,000 crore (Rs 500 billion) for commercialising two of its biggest gas discoveries in the D6 block located in the KG basin. "In a letter to oil regulator Directorate General of Hydrocarbons, the company has submitted one more development plan for Rs 10,000 crore as additional capex (capital expenditure) for the block.
It would be complete by 2012 with a total investment of over Rs 11,300 crore, including an estimated Rs 2,300 crore from RIL and Rs 9,000 crore from GAIL. Analysts say refineries -- Mangalore Refinery and Petrochemicals, Chennai Petroleum Corporation, Essar, Indian Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum Corporation -- located in the vicinity of these pipelines would benefit as they would be able to substitute costly fuel oil with cheaper gas.
Fertiliser, power plants plan expansion in anticipation
Two weeks ago, RIL chief Mukesh Ambani instructed his senior executives to get ready for production by October, almost two-three months ahead of the earlier planned schedule, as the refinery at Jamnagar, the East-West pipeline and facilities at KG basin are nearing completion, said sources. RIL is developing the largest gas find in the world in KG basin, with estimated gas reserves of 11.5 trillion cubic feet (TCF).
Justice Roshan Dalvi sought to recuse herself from the case involving Reliance Industries Ltd and state-owned National Thermal Power Corporation over the supply of gas from the Krishna-Godavari basin on Wednesday.
A division bench of Justices J N patel and K K Tated was hearing a case regarding the dispute between Anil-led Relaince Natural Resources Ltd and Mukesh's Reliance Industries Ltd over the gas supply master agreement (GSMA) whereby RIL will be supplying gas for RNRL's power plants.
Gas production from the country's biggest gas block is less than a year away, but Reliance Industries (RIL), operator of the block in the Krishna-Godavari basin, and Reliance Natural Resources (RNRL), the biggest buyer of gas from the block, have not made headway on renegotiating the sales agreement.
In a major relief to Mukesh Ambani-led Reliance Industries Ltd, the Bombay High Court Friday allowed the sale of gas from the Krishna-Godavari basin at $4.20 per million British thermal unit (mBtu) and reserved final judgment on a case brought by Anil Ambani-run Reliance Natural Resources Ltd.
In the past months, we have awarded 44 blocks, which is the highest ever, says Petroleum Secretary R S Pandey.
The crux of the ongoing court case between Reliance Industries (RIL) and Reliance Natural Resources (RNRL) on Monday was pricing of the gas produced from the Krishna-Godavari (KG) basin.
Monday's meeting of the empowered group of ministers on pricing of gas from Reliance Industries' D6 block in the Krishna-Godavari basin has proved inconclusive.
Reliance Industries is in talks with global energy majors, like British Gas of the UK, Chevron Corp of the US, Exxon and Shell for a possible stake sale in its Krishna-Godavari basin gas fields. RIL is looking for a strategic partner for its KG-D6 gas block to get deep sea exploration technology. The percentage of stake to be divested has not been firmed up & may depend on the value that the partner was bringing in. The block contains over 50trillion cubic feet of gas reserve
The fertiliser plant would use natural gas from the company's prolific gas field off in Krishna Godavari basin off the Andhra coast as feedstock.
With pricing of natural gas from the KG-D6 block stuck, Mukesh Ambani made the second trip to New Delhi this month to meet top officials.
Oil and Natural Gas Corporation will begin production from its Krishna Godavari gas discovery from 2012 and it has tied up with GAIL for transporting the fuel to the consumers.
RIL expects oil and gas sales from the Krishna-Godavari basin to boost its revenues and profits significantly. The company started test production of oil from the basin around 10 days ago. The cost of production per barrel of oil is not known. RIL's share price on the Bombay Stock Exchange has fallen 9.3 per cent in the last month as world markets have tumbled on fears of an economic crisis.
Reliance's entry into the club of integrated energy majors, courtesy the start of oil production in the Krishna-Godavari basin, marks a strategic inflection point for India, as it comes some three decades after the last major find at Bombay High went into production.
Reliance Industries will account for about 40 per cent of the country's energy production in the next 18 to 24 months, putting the company on track to earn a quarter of its profit from oil and gas production, from 5 per cent now.
The govt is mulling the need to exercise its rights under the gas production-sharing contracts.
The fuel from the KG basin will prune Rs 114,000 crore (Rs 1,140 billion) from the country's import bill. The price of $4.2 per million British thermal unit (mBtu) approved by the government for selling gas implies potential savings of about Rs 85,000 crore (Rs 850 billion) for consumers, said Ambani. Ambani's statement on gas pricing comes even as the government is considering a revision of the floor price of $4.2 mBtu that was approved in September 2007.
The Oil and Natural Gas Corporation plans to invest over US$ 5 billion to produce 25 million standard cubic meters per day of gas from its eastern offshore Krishna Godavari fields by 2013. The state-run firm on Wednesday submitted to the regulator Director General of Hydrocarbons an appraisal programme of the discoveries it had made in the KG offshore basin, putting the in-place reserves at 6.37 trillion cubic feet. ONGC also plans to produce 8,000 barrels of oil per day.
After the euphoria over the recent oil and gas discoveries made by upstream behemoth Oil and Natural Gas Corporation
On April 29, the Bombay High Court will start hearing the case between the warring companies, Reliance Industries Ltd (RIL) and Reliance Natural Resources Ltd (RNRL), to reach a quick decision on who will get access to the huge volumes of gas to be produced from RIL's block in the Krishna-Godavari basin. The court will also decide if the central government will be admitted as a party to the case. RNRL would oppose the central government's move to become a party to the case.
The official explained that the contractor would take the worst-case scenario into account "to be on the safe side", when working out the field development plan and the probable cost of exploration and development of the block.
The government is likely to clear the price quoted by Reliance Industries Ltd for its gas from the Krishna-Godavari basin without seeking to control the price.
RIL on Monday submitted a commerciality report for the Dhirubhai-39 discovery in block KG-DWN-2003/1, about 50 km off Machilipatnam in Andhra Pradesh, to the oil ministry and the directorate general of hydrocarbons. A company official said the well KG-V-D3-A1 flowed 38.1 million cubic feet per day of gas and the find was later named Dhirubhai-39.
ONGC is close to finalising a stake sale in two of its blocks -- one in the Krishna-Godavari basin and another in the Mahanadi basin -- to British Gas. It is also talking to US-based Noble Energy for offering it stake in some of its blocks in India. ONGC has already agreed to give a stake to Brazilian company Petrobras, Norwegian company Norskhydro and Italy-based ENI in its countrywide blocks.
RIL has raised the marketing margin to $0.15 per million British thermal unit from $0.12 per mmBtu earlier, a source said. The rate, which would be charged over the $4.20 per million British thermal unit base gas price, is however lower than the $0.18 per mmBtu margin charged by state-run GAIL. The increase, he said, was due to the additional risk of 'ship-or-pay,' an obligation under which the company would be obliged to transport the committed volumes or pay for the gas.
With the price of gas from its fields in the Krishna-Godavari basin expected to be higher than rivals, Reliance Industries is targeting automobiles and domestic users because power and fertiliser plants may not be able to afford it.
Reliance in the first phase is developing Dhirubhai-1 and 3, the first two of the 15 discoveries in the 7,645-square- kilometre KG-D6 block. Initial output is likely to be 40 million standard cubic meters per day (mmscmd), which will rise to 60 mmscmd in 2009-10.
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