RIL invites tenders to develop deepwater oil and gas blocks
Mukesh Ambani led Reliance Industries Ltd (RIL) on Tuesday invited tenders to develop many
of its deepwater oil and gas blocks, including the KG-D6 block off the coast of Andhra Pradesh.
In the first tender category, RIL has invited expressions of interest (EoIs) for all the oil and gas
blocks it won under the first and third editions of the New Exploration Licensing Policy (NELP-
1 and NELP-3). The contracts are for conceptual engineering/front-end engineering and design,
among others.
In the second category, specifically for the KG-D6 block, the company has invited EoIs for all
operation and maintenance services, equipment and materials. RIL had previously initiated
arbitration proceedings against the government over the price of gas produced at this block.
The development comes a couple of days after Mint reported that RIL and partner BP Plc. are in
talks with the government to drop the arbitration.
The company has invited tenders on behalf of itself and its partners BP Exploration (Alpha) Ltd,
Niko (NECO) Ltd and Niko (NELPIO) Ltd.
Based on the bids, Reliance Industries (RIL) will submit an investment plan to the government.
The projected investment could be lower due to the fall in crude prices.
“Reliance Industries will renegotiate the contracts with vendors with the oil prices coming down.
Based on the bids, the company will submit a field development plan to government by next
year,” a person close to the development said.
A spokesperson for Reliance Industries declined to comment.
RIL shares closed 0.70% up at Rs.1,047.17 on the BSE on Tuesday, while the benchmark Sensex
gained 0.49% to 25,145.59 points.
On Monday, Mint reported that RIL and BP have initiated discussions with the government to
drop the arbitration over its dispute on natural gas prices, citing an oil ministry official familiar
with the developments.
RIL-BP have also signalled their intention to invest $10 billion over the next few years to
recover about 2.5 trillion cubic feet (tcf) of gas from deep sea fields that the combine expects to
be allowed to sell at free market prices under the new gas-pricing rules, the Mint report said.
Withdrawal of arbitration is a pre-condition to RIL-BP being allowed free pricing of gas
produced from their allotted fields, according to the gas-pricing policy announced by the
government on 11 March.
The minister of state for petroleum and natural gas, Dharmendra Pradhan, met executives of both
companies in the first week of April.
RIL initiated arbitration in 2014 demanding implementation of the pricing formula developed by
previous United Progressive Alliance (UPA) government. Enforcing that formula would have
doubled the price from the then prevailing $4.2 per million British thermal unit (mmBtu) from 1
April 2014.
However, the UPA government could not go ahead with this due to the model code of conduct
enforced by Election Commission ahead of the Lok Sabha election.
The current government modified the formula. As per this, the price is set at $3.06 mmBtu for
the April-September period of 2016. This price applies to gas produced at present. The free
pricing regime announced on 11 March is for discoveries that are yet to start production as on 1
January 2016.
A presentation by the oil ministry said that the pricing freedom will help in monetizing 6.5 tcf of
gas valued at $28.35 billion, or Rs.1.8 trillion. Of this, RIL has eight deep-water and ultra-deep
water discoveries with 2.53 tcf of gas. BP is a 30% partner in RIL’s 21 gas blocks, including in
the KG- DWN-98/3, known as KG D6. Canada’s Niko Resources has a 10% holding in KG D6.
In 2013, BP had said it will, along with Reliance, invest about $5-10 billion to quadruple gas
production from the then 11.9 million metric standard cubic metres a day by 2020.
Implementation of that investment commitment, however, was delayed due to what were seen as
unviable gas prices.
https://www.livemint.com/Industry/5VR4vRS8b8ypYJpKyOY6CJ/RIL-seeks-bids-for-