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RIL to abandon Mahanadi basin block over low gas price

Last Updated: Tuesday, May 22, 2012 - 22:47

New Delhi: Reliance Industries has decided to give back a Mahanadi basin deepsea block D4 due to natural gas discoveries not being viable to produce at current subdued domestic prices.

The company's minority partner, Niko Resources of Canada in a press statement said the partners have decided to relinquish MN-DWN-2003/1 or D4 block, which lies north of RIL's mainstay D6 block in the neighbouring Krishna Godavari basin.

"...This decision is the result of the most current geological assessment related to the size and risk of the trapping mechanism and current commercial environment in India," it said.

RIL is the operator of the block with 55 percent stake while BP Plc of UK hold 30 percent. Niko had the remaining 15 percent.

Niko had previously stated that the block holds sizeable natural gas reserves and the decision of the partners to abandon the area was mainly due to the find being uneconomical to produce at the prevailing price of USD 4.205 per million British thermal unit.

RIL has been seeking an increase in this price so that it become economically viable to produce from satellite and smaller fields in KG-D6 block where the main producing channels have seen output drop to under 33 million standard cubic meters per day from 61.5 mmscmd achieved in March 2010.

The company and its British partners feel the 16 satellite finds in the KG-D6 block would be viable only at a higher gas price.


First Published: Tuesday, May 22, 2012 - 22:47
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