Next week to see RIL reap first of KG gains

NEW DELHI: Six years after Reliance Industries made the world���s largest gas find in the Krishna Godavari (KG) basin in 2002, the company is now set to start raking in the moolah from its investments sunk in the deepwaters of the Bay of Bengal by producing the first barrel of oil. At full production of 40,000 barrels a day, RIL will earn revenues of around $3.5 billion annually from this field.

RIL, which is working on a warfooting with most of its exploration and production brass stationed at the offshore platform, is expected to begin producing 20,000 barrels per day from next week.

The oil production from RIL���s MA fields will see several firsts. While this would be RIL���s first production from the KG basin, it also marks the beginning of the oil trading market in the country, in which crude oil producers can sell the oil at market-determined prices based on international benchmarks.

The first batch of oil, which will be priced at a premium, given its superior quality, will be sold to state-run HPCL at Vizag. RIL���s MA field is part of the D6 block, which is slated to begin gas production by year-end. The oil production from these fields is doubly significant because it will also be the first from deepwater basins in the country.

Deepwater exploration basins are risky operations and discoveries in such fields indicate that India���s hydrocarbon reserves hold good potential. RIL���s KG discoveries, followed by Cairn and GSPC, have kindled new hope in the global investment community.