Thursday, November 20, 2008

First batch of RIL's KG crude oil reaches HPCL

Hindustan Petroleum Corp Ltd has received the first consignment of crude oil from Reliance Industries' eastern offshore Krishna Godavari basin D6 block.

A ship carrying 59,000 tonnes of oil from the MA-1 field in predominantly gas-rich D6 block in the Krishna Godavari basin in the Bay of Bengal, reached HPCL's Vizag refinery in Andhra Pradesh yesterday evening, top company officials said.

Reliance sold the first consignment at USD 5.34 a barrel discount to Nigerian crude grade Bonny Light. Oil and Natural Gas Corp, India's largest crude oil producer, also benchmarks its prime Mumbai High crude at this grade.

Crude oil from MA-1, where production started in September, was to reach Vizag on November 17 but bad weather obstructed transportation. The weather cleared on Wednesday and a vessel carrying MA-1 oil reached the refinery jetty by evening.

Reliance is currently producing 10,000 barrels of crude oil per day from the MA-1 field.

The official said HPCL will study the properties of the crude oil for appropriate benchmarking. Thereafter, Reliance may enter into one-year sale contracts.

Besides Vizag, Chennai Refinery is also keen on KG-D6 crude, which is likely to peak to 40,000 bpd (2 million tonnes a year) in the second calendar quarter of 2009.

In all likelihood, Reliance may split the volumes equally between the two.

Reliance is the operator with a 90 per cent stake in the 7,645 square km D6 block, off the Andhra coast. Niko Resources of Canada holds the remaining 10 per cent interest.

The official said crude oil from the MA-1 field is stored on a floating, production, storage and off-loading vessel (FPSO) at the well-head and once critical volumes are reached it is transfered to a ship for transportation to a refinery.

Reliance, which had budgeted USD 1.5 billion for developing the oil field, has till now spent USD 950 million and would invest the remainder in drilling and tying in four additional wells.

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