India ramps up deepwater gas production

The beginning of production at what is now Asia’s deepest offshore natural gas field will increase the share of natural gas in India’s energy basket.

India set to strengthen natural gas production

A few days ago, Reliance Industries Limited (RIL) and BP announced the start of production from the R Cluster, an ultra-deepwater gas field in block KG D6 off the east coast of India. RIL and BP are developing three deepwater gas projects in block KG D6: R Cluster, Satellites Cluster, and MJ. Together, RIL said it expects the projects to meet over 15 percent of India’s natural gas demand by 2023.

What makes the find even more newsworthy is that it is located at a depth of more than 2,000 meters, making R Cluster the deepest offshore gas field in Asia.

Production ramp-up

By the end of next year, it is expected to reach plateau gas production of about 12.9 million standard cubic meters per day (mmscmd), per MoneyControl.com.

These projects will utilize the existing hub infrastructure in KG D6 block. RIL is the operator of KG D6 with a 66.67 percent participating interest. BP holds a 33.33 percent participating interest.

R Cluster is about 60 kilometers from the existing KG D6 Control and Riser Platform (CRP).

Mukesh Ambani, chairman and managing director of Reliance Industries Limited, said in a press release that production from the natural gas field marked a “significant milestone” in India’s energy landscape for a cleaner and greener gas-based economy.

Looking ahead

Incidentally, RIL’s partner in this project, BP has been in India for over a century. BP is one of the largest international energy companies in the country.

RIL expects the next project, the Satellites Cluster, to come onstream in 2021, followed by the MJ project in 2022.

RIL expects peak gas production from the three fields to be around 30 mmscmd (1 bcf/d) by 2023. That combined production is expected to account for about 25 percent of India’s domestic production. As such, the development will help reduce the country’s dependence on imported gas.

RIL and BP will get only US $4.06 a unit for the new gas they have started to produce from the eastern offshore KG-D6 field even though they have discovered a higher rate in an open market auction, the Business Standard reported.

The operators had pricing freedom. However, they cannot sell gas at a rate higher than the cap the government notifies every six months. The cap for six months to March 31, 2021, is US $4.06 per mmBtu.

There is also a steel perspective to the news. Essar Steel, Adani Group and state-owned GAIL in November 2019 bought the majority of the initial five million standard cubic meters per day of gas from the KG-D6 block, the Business Standard reported.

This article was originally published on Oilprice.com