NEW DELHI – Output from Indian energy giant Reliance Industries’ main D6 gas fields off the country’s east coast is expected to fall to a record low, India’s oil minister said on Tuesday.
“Gas output is projected to decline to 20 million standard cubic metres a day (mscmd) by March 2015,” oil minister S. Jaipal Reddy told lawmakers, in a written reply to parliament.
Reliance has been holding talks with India’s upstream regulator about how to lift production as increased output is seen as vital both for the company and to fuel India’s strong economic growth.
Reliance is likely to produce 28 mscmd of gas from its key D6 fields in the Krishna-Godavari basin in the current financial year ending March 2013, Reddy said, well below the peak of 60 mscmd touched in 2010.
The government earlier rejected a bid by Reliance to recover $1 billion in costs spent developing the offshore gas field under the state exploration promotion policy.
The government said the company had failed to fulfil commitments.
“Production from the KG-D6 block has been adversely impacted due to unforeseen reservoir complexities,” the company said when it reported a 20 percent fall in quarterly profit last month.
Last year, British energy giant BP paid $7.2 billion to acquire a 30 percent stake in 21 of Reliance’s oil and gas fields.
Reliance hopes that BP’s deepwater drilling expertise will give the Indian giant the skills to develop hard-to-exploit reserves and find more oil.
The government and investors have been concerned for months over Reliance’s declining gas output from its main D6 fields.
Reliance’s shares fell 30 percent in 2011 and the stock continues to underperform the broader benchmark 30-share Sensex index this year.
Reliance operates the world’s largest oil processing complex in Jamnagar, where two adjacent refineries have a combined capacity to process over 1.2 million barrels of oil a day.