RIL’s KG basin could yield 50% more gas than earlier estimated

India’s largest company by market value, Reliance Industries Ltd (RIL), may produce 50% more natural gas from the country’s biggest field than the company estimated, easing shortages that idled utilities in the world’s second fastest growing economy.
The Krishna-Godavari (KG) region in the Bay of Bengal may yield as much as 120 million cubic metres a day (mcmd) after eight new discoveries, V.K. Sibal, director general of hydrocarbons, had said in an 8 April interview. The previous target for the field, scheduled to start production in the next 12 months, was 80mcmd.
RIL is investing $5.2 billion (Rs20,800 crore) to develop the KG region, which will more than double the country’s output and may alleviate shortages that have shut down one-third of the nation’s gas-fired power plants. Demand may quadruple to 400mcmd by 2025, if the economy expands at the government’s projected annual rate of 7-8%, according to the petroleum and natural gas ministry.
“Such finds may make explorers look at India as a country rich in hydrocarbons,” said Jaspreet Singh, an associate vice-president at brokerage Prabhudas Lilladher Securities in Mumbai. “India needs to increase oil and gas output because fuel demand is rising and the supply gap is widening,” he added.
RIL’s profits almost doubled in the past three years on record earnings from processing crude oil into fuels. The Mumbai-based company intends to start production during the second half of the financial year ending March 2009, chairman Mukesh Ambani had said last year.

Fields adjoining RIL’s main discovery, called D-6, will be linked to pipes and booster stations being built to transport fuel from the field, Sibal added.
“On the basis of the infrastructure that is being put up, there is very little doubt that gas output from Reliance’s fields will be more than has been talked about,” said Deven Choksey, chief executive officer at Mumbai-based KR Choksey Shares and Securities, which manages $550 million for wealthy individuals.

Natural gas prices may rise 50% within five years because producers, including Russia and Nigeria—which hold almost half the world’s gas—are curbing exports to meet growing domestic use, said Chris Jarvis, president of Caprock Risk Management in Hampton Falls, New Hampshire.

RIL to sell upto 10% in KG Basin

Meanwhile Reliance Industries is planning to sell upto 10% stake in D-6 block in the Krishna Godavari (KG) basin and has initiated talks with prospective buyers, reports Economic Times.

Royal Dutch Shell confirmed that it was in talks with RIL about taking a stake in the D6 block in the KG basin off India`s east coast.

The company is learnt to have appointed Goldman Sachs for looking a strategic partner.

RIL is likely to spin off its KG assets into a new company and then offer close to 10% stake to a strategic partner. This is to ensure that the partner does not get a stake in RIL.

Shares of the company gained Rs 49.65, or 2.05%, to end at Rs 2,467.7. The total volume of shares traded was 1,516,202 at the BSE. (Thursday)