'Peak production from KG-D6 will help address gas shortfall'
While gas such as CNG will cut the subsidy bill on transportation fuels, its usage in fertiliser production can reduce fertiliser subsidy, says RIL's CEO and President (Oil & Gas) PMS Prasad
By Soma Banerjee, ET Bureau |
While gas such as CNG will cut the subsidy bill on transportation fuels, its usage in fertiliser production
can reduce fertiliser subsidy, says RIL's CEO and President (Oil & Gas) PMS Prasad
RIL's gas production from the Krishna-Godavari basin is not just a new source of energy in the country. While at the macro level it will reduce the government's fertiliser subsidy bill, for many power projects in Andhra Pradesh and Maharashtra, including the ill-fated Dabhol power plant, RIL gas will provide a new lease of life.
In an exclusive interview on the eve of the gas production even as sales contracts with fertiliser companies were being inked, Prasad spoke about the implications of the discovery and the complexities of the project. Excerpts:
What does this gas production mean as far as import substitution is concerned?
India is an energy deficit economy and needs energy for growth. The country is significantly dependent on import of energy in the form of crude oil, coal and LNG to meet its requirement. It is estimated that the transfer of wealth from India to the oil exporting nations amounted to $56 billion in 2007-08.
At this level, the D6 oil and gas production will account for about 40% of India���s total oil and gas production. The peak 80 MMSCMD of gas production will eliminate a major portion of the current shortfall in gas availability in India. And the production of 5,50,000 boepd will save wealth transfer of $10 billion. The usage of gas as CNG will cut subsidy bill on transportation fuels. D6 gas usage in fertiliser production can reduce fertiliser subsidy.
How does KG-D6 compare with similar deep-water projects? In particular, with relation to execution time and costs?
Normally, such deep-water developments take anywhere between 8 to10 years from discovery. We shall be completing this project in 5-6 years, which in itself is an achievement since this is the largest and most complex deep-water development of its kind anywhere in the world.
What were some of the major imponderables faced by the project?
When weather gets bad one has to re-plan the whole vessel deployment and re-sequence offshore activities with minimum loss of time. The project is being commissioned at a time when the industry is faced with an acute shortage of resources across the supply chain, which includes manpower, equipment, manufacturing facilities, fabrication yards and services. Remoteness of the location compounded by a lack of existing infrastructure were all key factors that had to be kept in mind at the project design stage.
What does KG gas mean to India's gas market? How much will it cover the demand-supply gap?
There is a shortfall of over 100 mmscmd. The KG-D6 field is expected to have a peak production of 80 mmscmd, which means that a major portion of the current shortfall in gas availability can be met once KG-D6 production reaches its peak.
Going by the current shortfall faced by the power and fertiliser projects and their connectivity to gas pipelines, it is estimated that around 30-35 mmscmd of KGD6 gas would go to the power sector and around 15-20 mmscmd would go the fertiliser sector. Supply of 35 mmscmd gas to the power sector would result in increase in generation by around 8,000 MW of power.
Similarly, supply of 20 mmscmd gas to the fertiliser sector would deliver in increase in urea production of nearly 10 million tones per annum, which will result in total elimination of imports of urea in India. Supply of gas to the power and fertiliser sector will also result in lower dependence on imported LNG for these plants.
For example, 1 MMSCMD of gas can save Rs 550 crore per annum in transportation fuel subsidies for diesel alone. The benefits for petrol would obviously be higher. Similarly, the efficiency of distributed power is more than 70% and usage of 1 MMSCMD for distributed power generation can save Rs 500 crore per annum.
can reduce fertiliser subsidy, says RIL's CEO and President (Oil & Gas) PMS Prasad
RIL's gas production from the Krishna-Godavari basin is not just a new source of energy in the country. While at the macro level it will reduce the government's fertiliser subsidy bill, for many power projects in Andhra Pradesh and Maharashtra, including the ill-fated Dabhol power plant, RIL gas will provide a new lease of life.
In an exclusive interview on the eve of the gas production even as sales contracts with fertiliser companies were being inked, Prasad spoke about the implications of the discovery and the complexities of the project. Excerpts:
What does this gas production mean as far as import substitution is concerned?
India is an energy deficit economy and needs energy for growth. The country is significantly dependent on import of energy in the form of crude oil, coal and LNG to meet its requirement. It is estimated that the transfer of wealth from India to the oil exporting nations amounted to $56 billion in 2007-08.
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In addition to this, the government incurred a subsidy of $18 billion on petroleum fuels, and another $1.8 billion on LPG usage in 2007-08. The subsidy bill on fertilisers, which was around $7 billion in 2007-08, is expected to touch $20 billion in FY 2009. Peak production of oil and gas from KG-D6 is expected to be 5,50,000 barrels of oil equivalent per day. At this level, the D6 oil and gas production will account for about 40% of India���s total oil and gas production. The peak 80 MMSCMD of gas production will eliminate a major portion of the current shortfall in gas availability in India. And the production of 5,50,000 boepd will save wealth transfer of $10 billion. The usage of gas as CNG will cut subsidy bill on transportation fuels. D6 gas usage in fertiliser production can reduce fertiliser subsidy.
How does KG-D6 compare with similar deep-water projects? In particular, with relation to execution time and costs?
Normally, such deep-water developments take anywhere between 8 to10 years from discovery. We shall be completing this project in 5-6 years, which in itself is an achievement since this is the largest and most complex deep-water development of its kind anywhere in the world.
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The only project near this scale is the Ormen Lange Project in Norway (capacity of 70 MMSCMD). The KG-D6 deep-water production facilities are the largest and amongst the most complex such facilities in the world. The project ranks as the fastest and amongst the most capital efficient in the world to date.What were some of the major imponderables faced by the project?
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Deep-water environments are amongst the harshest environments for oil and gas production facilities. Major imponderables in the project execution were (a) the adverse weather conditions on the east coast of India wherein heavy construction activity is limited to a little over four months and rest of the year, weather is unpredictable in terms of high currents and cyclones, and (b) the management of an offshore construction fleet of over 80 state of the art expensive ships/vessels/barges in a limited construction area, their interfaces and keeping them busy on productive work. When weather gets bad one has to re-plan the whole vessel deployment and re-sequence offshore activities with minimum loss of time. The project is being commissioned at a time when the industry is faced with an acute shortage of resources across the supply chain, which includes manpower, equipment, manufacturing facilities, fabrication yards and services. Remoteness of the location compounded by a lack of existing infrastructure were all key factors that had to be kept in mind at the project design stage.
What does KG gas mean to India's gas market? How much will it cover the demand-supply gap?
There is a shortfall of over 100 mmscmd. The KG-D6 field is expected to have a peak production of 80 mmscmd, which means that a major portion of the current shortfall in gas availability can be met once KG-D6 production reaches its peak.
Going by the current shortfall faced by the power and fertiliser projects and their connectivity to gas pipelines, it is estimated that around 30-35 mmscmd of KGD6 gas would go to the power sector and around 15-20 mmscmd would go the fertiliser sector. Supply of 35 mmscmd gas to the power sector would result in increase in generation by around 8,000 MW of power.
Similarly, supply of 20 mmscmd gas to the fertiliser sector would deliver in increase in urea production of nearly 10 million tones per annum, which will result in total elimination of imports of urea in India. Supply of gas to the power and fertiliser sector will also result in lower dependence on imported LNG for these plants.
For example, 1 MMSCMD of gas can save Rs 550 crore per annum in transportation fuel subsidies for diesel alone. The benefits for petrol would obviously be higher. Similarly, the efficiency of distributed power is more than 70% and usage of 1 MMSCMD for distributed power generation can save Rs 500 crore per annum.
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