Reliance Industries Confident of Unlocking Field Potential with BP

- Reliance Industries Confident of Unlocking Field Potential with BP

Friday, September 09, 2011
Dow Jones Newswires
NEW DELHI
by Rakesh Sharma & Saurabh Chaturvedi

Reliance Industries Ltd. (500325.BY) Friday said it was confident of unlocking the full potential of its prolific east coast gas field and other blocks with the help of its partner BP Plc (BP).

The country's largest private explorer is fighting a decline in gas output at its D-6 Block in Krishna Godavri Basin. Reliance on Aug. 30 closed a deal with U.K.-based BP Plc to sell a 30% stake in its 21 oil and gas exploration blocks in India.

Last month, India's junior oil minister R.P.N. Singh said that gas production from Reliance's KG-D6 block during the April-June quarter was 31% below plan. Reliance's average gas production during April-June from the block was 48.60 million standard cubic meters per day.

Based on the approved field development plan, the output should have been 70.39 mmscmd, the minister said.

India's federal auditor Thursday said Reliance Industries had violated the KG D6 production-sharing contract with the government.

The Comptroller and Auditor General said Reliance initially estimated its capital expenditure for the D-1 and D-3 gas discoveries in the block at $2.4 billion, but revised it to $8.8 billion. The company also started implementing the revised plans before the government approved them.

The Mukesh Ambani-controlled company said it had engaged global consultants Ernst & Young, IPA Inc. and Daniel Johnston & Co., who didn't find any irregularity in its capex and management of the block.

Reliance said it commenced gas production from KG-D6 in six-and-a-half years from discovery, in comparison to the global average of nine to 10 years for similar deep-water production facilities.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Reliance, BP Finalize $7.2B Acquisition

- Reliance, BP Finalize $7.2B Acquisition

Thursday, September 08, 2011
Reliance Industries Ltd.

Reliance Industries Limited (RIL) and BP announced the completion of BP's acquisition of a 30 percent stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG D6 block.

This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing. The completion of the deal delivers one of the largest ever foreign direct investments into India.

The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said, "The alliance with BP will boost our efforts to realize the true potential of India's hydrocarbon reserves. The globally renowned expertise of BP and the in-depth domestic experience of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security."

"This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Bob Dudley, BP group chief executive. "This major investment is directly aligned with our strategy of creating long-term
value by forming alliances with strong national partners, gaining material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets."

BP will pay RIL an aggregate consideration of US $7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts. Further performance payments of up to US $1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

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BP, Reliance Make India Alliance Official

- BP, Reliance Make India Alliance Official

Tuesday, August 30, 2011
Reliance Industries Limited

Reliance Industries Limited (RIL) and BP on Tuesday announced the completion of BP's acquisition of a 30-percent stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG D6 block.

This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing. The completion of the deal delivers one of the largest ever foreign direct investments into India.

The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

Mukesh Ambani, Chairman and Managing Director, Reliance Industries, said, "The alliance with BP will boost our efforts to realize the true potential of India's hydrocarbon reserves. The globally renowned expertise of BP and the in-depth domestic experience of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security."

"This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Bob Dudley, BP group chief executive. "This major investment is directly aligned with our strategy of creating long-term value by forming alliances with strong national partners, gaining material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets."

BP will pay RIL an aggregate consideration of US$7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts. Further performance payments of up to US$1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

The 21 oil and gas blocks cover approximately [220,000] square kilometers and lie in water depths ranging from 400 to over 3,000 meters. They include the KG D6 block that currently produces about [1.7] billion cubic feet of gas per day (bcf/d), over 40 percent of India's total gas production. RIL will remain operator of the PSCs and BP will bring its global deepwater, sub-surface and gas expertise to enhance exploration and development of the blocks.

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India OKs Reliance Industries' $7.2B Asset Sale to BP

- India OKs Reliance Industries' $7.2B Asset Sale to BP

Friday, July 22, 2011
Dow Jones Newswires
NEW DELHI
by Rakesh Sharma

India approved Reliance's proposed $7.2 billion asset sale to BP, paving the way for the U.K. oil giant's largest venture in the South Asian nation.

The companies have been waiting for approval from the federal government since February when Reliance, controlled by billionaire Mukesh Ambani, agreed to sell a 30% stake to BP in 23 oil and gas blocks for $7.2 billion plus another $1.8 billion linked to exploration success. The deal includes the D6 block in the Krishna-Godavari basin, India's richest gas find so far, and Reliance has already received $2 billion from BP.

Oil Minister Jaipal Reddy said his ministry recommended the Cabinet Committee on Economic Affairs to approve the deal for 21 blocks as there were some technical issues over two non-producing blocks. The ministry may in future grant or refuse consent on the two blocks, he added.

"This is one of the major foreign investments in the history of India," Reddy said. "This transaction will not only mean investment of $7.2 billion by a foreign company in India, it will also mean induction of vast technical expertise to India's hydrocarbon sector."

Under the February agreement, BP and Reliance will also establish an equally owned joint venture for the sourcing and marketing of natural gas in India. That venture doesn't require government approval.

BP's chief executive, Robert Dudley, said the energy giant hopes to complete the deal in a matter of weeks.

Reliance didn't immediately comment on the announcement.

Future investments to develop Indian assets could bring its total payments to $20 billion, BP had said previously.

The deal gives BP access to new hydrocarbon resources and markets, in line with its strategy of continuing to increase exploration and access new exploration acreage, especially as it is yet to resume drilling operations in the Gulf of Mexico following last year's oil spill there.

Reliance is expected to gain from BP's deepwater drilling expertise to increase gas production. The company's D6 block is expected to boost India's gas supply, but several technical and geological issues have resulted in output from the field off the eastern coast falling below 50 million metric standard cubic meter per day from 60 MMSCMD last year.

Reliance's market valuation has taken a hit due to issued including the decline in gas production. Its shares closed 1.5% up at INR873.60 ahead of the announcement on the Bombay Stock Exchange, where the benchmark index closed up 1.6%.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Reliance Hits Gas Pay Offshore India

- Reliance Hits Gas Pay Offshore India

Wednesday, June 22, 2011
Hardy O&G plc

Hardy O&G announced its first gas discovery in the exploration well KG-D9-A2 within the D9 license.

The well KGD9-A2 was drilled to a total depth of 4,881 m MDRT with the objective of exploring the play fairway in the Early and Late Miocene Channel Levee Complex in a water depth of approximately 2,700 m. Three sand reservoirs with a gross thickness of approximately 22 m were encountered and evaluated by wireline MDT. This discovery, named 'Dhirubhai - 54' has been notified to the Government of India and DGH. The potential commerciality of this discovery is being ascertained through more data gathering and analysis. This play fairway is expected to cover a considerable area within the block.

The D9 exploration license is located in the Krishna Godavari (KG) Basin on the east coast of India and presently covers an area of approximately 8,695 km2. Hardy holds a 10 percent participating interest in the license which is operated by Reliance Industries Limited. The license's minimum work program provides for the drilling of four exploration wells.

Commenting on the well results, Yogeshwar Sharma, Chief Executive Officer of Hardy said, "We are encouraged by this discovery which extends the proven Miocene play fairway into the frontier D9 block. The discovery further enhances our understanding of the block's petroleum systems and reinforces our enthusiasm for unlocking its hydrocarbon potential. The D9 joint venture expects to drill the fourth exploration well prior to the end of 2011."

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Reliance Debunks Claims on KG-D6 Output Decline

Reliance Debunks Claims on KG-D6 Output Decline

Monday, May 09, 2011
Asia Pulse Pte Ltd

India's Reliance Industries has debunked charges that KG-D6 gas field output fell due to non-drilling of an adequate number of wells, saying the phenomenon was a result of reservoir complexity and indiscriminate drilling would have lead to infructous capital expenditure.

The drop in production from over 61 million cubic meters per day achieved in March, 2010, to under 50 mmcmd was a result of the main reservoir channels not behaving in the manner predicted in 2006.

"Reliance has told us that pressure in wells has fallen rapidly and some wells haven shown early water ingress," an Oil Ministry official said. "They made a detailed presentation on the problems being faced at the field on May 2 and by the look of it, we feel there are some genuine reservoir issues."

More wells on the main channel area of the Dhirubhai-1 and 3 fields, the largest of the 18 gas finds in the block that were put into production in 2009, is unlikely to either raise production rate or recovery as they will drain the same resource, he said.

Reliance will identify disconnected gas volumes and drill wells on them, an exercise that will take 3-4 years.

It has drilled 20 out of the 22 wells committed in the field development plan (FDP) as it now feels that drilling of additional wells unmindful of the reservoir behavior would have resulted in huge capital expenditure which would have been difficult to justify later.

Oil regulator DGH is pushing for drilling of 11 committed wells by April 1, 2012, to raise output. Reliance wants UK's BP Plc to come on board first.

BP is buying 30 percent interest in KG-D6 and 22 other blocks for US$7.2 billion.

Once the government approves the stake buy, Reliance plans to sit with BP to come up with most optimal solution to the reservoir problem including drilling of additional wells.

Reliance is allowed to recover every penny spent on the field from sale of gas before profits are split with the government. Investment in injudicious additional wells would have led to a reduction in the government's petroleum profit.

Sitting in water depths of up to 1.2 kilometers, the KG-D6 is the first deepsea field in South Asia to go on production and there are no deepwater analogs available for reference on how the reservoir will behave.

As a result, Reliance had to depend on its own resources and some global industry consultants for the characterization, modelling and development of this complex deepwater reservoir system.

Current wells have no contribution from the areas outside the main channel area, contrary to what was predicted at the time of FDP in 2006.

(C) 2011 Asia Pulse Pte Ltd.

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India's Reliance to Explain Falling Gas Output from Kg D6

India's Reliance to Explain Falling Gas Output from Kg D6

Monday, April 25, 2011
Asia Pulse Pte Ltd

India's oil regulator Directorate General of Hydrocarbons (DGH) will summon Reliance Industries next month to seek explanation on falling output from Eastern Offshore KG D6 gas deal.

"The explanation that they have given is not sustainable. We will call Reliance and its partner Niko Resources of Canada in first week of May to explain the situation," S K Srivastava, Director General of DGH said here.

Reliance has seen gas output from KG D6 drop to 50 million metric standard cubic meters per day (mmscmd) from 61.5 mmscmd production level achieved in March 2010.

Srivastava said output from KG D6 should have been 51.8 mmscmd in April 2011 as per the Field Development Plan (FDP) submitted by Reliance and approved by the DGH and the government.

"Reliance, according to the FDP was to drill 22 wells by April 2011. Against this, it has so far completed 18 wells on KG D6. Another two wells have been drilled but not completed," he said.

According to FDP, Reliance is to drill a total of 31 wells by 2012, to raise output to 80 mmscmd, Srivastava said adding that the DGH will seek an explanation from Reliance on the shortfall in drilling of wells at the May meeting.

Reliance holds 90 percent stake in KG D6, while Niko has the balance 10 percent.

Reliance Makes First Gas Find in Cauvery Basin

Reliance Makes First Gas Find in Cauvery Basin

Thursday, April 21, 2011
Reliance Industries Ltd.
by SubseaIQ

Reliance announced a rich gas and condensate discovery in the very first well drilled in the block CY-PR-DWN-2001/3(CYPR-D6) located in deepwater Cauvery-Palar basin. The Block with an area of about 8600 sq km was awarded to RIL under the bidding round of NELP-III. RIL currently holds 100% participating interest in this block. This is one of the 23 exploration blocks where BP Exploration (Alpha) Limited would have a 30% participating interest subject to the Government approval.

The discovery well CYPR-D6-SA1 is located in a water depth of 1194m and was drilled to a target depth of 3815m and terminated in crystalline basement. The well encountered multiple hydrocarbon bearing clastic reservoirs in Late Cretaceous section. The presence of rich Gas and condensate has been confirmed by several tests including Modular Dynamic Testing (MDT) and Drill Stem Testing (DST). During DST the well produced 37 million standard cubic feet of gas and 1100 barrels of condensate per day through a 56/64" choke size from the main zone that has a gross thickness of about 70m (230 ft). Another zone at a shallower level was established through MDT sampling where gas and condensate sample was collected. This discovery namely Dhirubhai-53 has been notified to Government of India and Directorate General of Hydrocarbons.

Further appraisal activity is being planned to assess the extent of these reservoirs along this play trend.