Growth through Energy
Security for India
India imports about two-thirds
of its crude oil requirement. Exploration and
production of oil and gas is critical for India's
energy security and economic growth. Reliance's
oil and gas exploration and production business
is therefore inexorably linked with the national
imperative. Exploration and production, the initial
link in the energy and materials value chain,
remains a major growth area and Reliance envisions
evolving as a global energy major.
Over the years the E&P industry
has registered significant growth, primarily due
to spiraling crude oil and gas prices. With growing
competition and ever growing demand for energy,
especially from developing countries, the focus
is on energy security. Global demand for oil grew
by 0.8% from 83.1 million barrels per day in 2005
to 83.8 million barrels per day in 2006. India's
share is a meager 0.5 % of global oil reserves
of 1,189 billion bbl, while it consumes 3.2 %
of global oil consumption every year.
The growing demand for crude
oil and gas in the country and policy initiative
of Government of India towards increased E&P
activity, have given a great impetus to the Indian
E&P industry raising hopes of increased exploration.
Natural Gas prices in Asia and Europe which are
predominantly linked to crude remained volatile
and Henry hub natural gas prices averaged US$
8/MMBTU for 2006. The International Energy Agency
(IEA), in its world energy outlook, has estimated
investment requirements of over US$ 8.2 trillion
over the next two decades in order to bridge the
demand supply gap. This is substantially higher
than its earlier forcast of US$ 5.3 trillion which
underlines a positive demand outlook for energy.
Under the New Exploration Licensing
Policy (NELP) of Government of India, blocks have
been acquired by various E&P companies for
exploration. The efforts have resulted in a number
of oil and gas discoveries in India and have changed
the perception and prospects of the Indian sedimentary
basins and the focus on Indian E&P Industry.
RIL is the largest Oil &
Gas acreage holder among the Private sector companies
in India with 33 domestic exploration blocks covering
an area of about 337,000 sq. km. This is in addition
to its interest in three exploration blocks in
Yemen, two each in Oman and Columbia and one each
in East Timor and Australia covering an area of
about 38,000 sq. km. RIL also has 5 coal bed methane
(CBM) blocks covering an area of about 4,000 sq.
km.
RIL is India's first private
sector company in the Exploration and Production
(E&P) sector to have discovered large gas
reserves. The E&P strategy of RIL is aimed
at further enhancing the level of vertical integration
in its energy business, and realising value across
the entire energy chain, while fulfilling important
national priorities.
In the years to come, RIL is
well positioned to be amongst the largest value
creators in the upstream oil and gas sector. RIL's
portfolio of E&P assets, gives it the potential
to create value across entire value chain from
wellhead to burner tip. Accretion of new reserves
through exploration, development of existing oil
and gas reserves and development of related downstream
infrastructure facilities would result in significant
value creation for RIL in future. On a cumulative
basis, we have drilled 51 exploratory wells thus
far in our acreage in India with a success rate
of 61%. These are in addition to the 3 appraisal
wells drilled in the KG-D6 block.
Panna
Mukta Tapti (PMT) Blocks:
RIL holds a 30 % interest in
an unincorporated Joint Venture with British Gas
and ONGC, to develop the proven Panna-Mukta and
Tapti oil and gas fields. British Gas and ONGC
have a 30 % and 40 % share in the fields respectively.
The PMT JV commenced direct marketing of gas from
April 1, 2005. The JV is supplying gas to consumers
like Gujarat State Petroleum Corporation, Gujarat
Gas Company Limited, Gas Authority of India Limited
etc. The Panna-Mukta fields produced 1.77 Million
MT of crude oil and 1,662 MMSCMD of natural gas
during the year compared to 1.57 Million MT of
crude oil and 1,445 MMSCMD of natural gas produced
during the previous year. The Tapti field produced
2,228 MMSCMD of natural gas during the year compared
to 2,044 MMSCMD of natural gas produced during
the previous year. Impressive progress made on
implementation of growth initiatives at the PMT
fields. The expanded plan of development (EPOD)
for Panna - Mukta fields comprising of the installation
of 2 wellhead platforms and drilling of 6 wells
is nearing completion. Of this, 4 wells are already
operational and work on the remaining wells is
progressing as per plan. Efforts are on to increase
production by drilling additional 15 wells over
the next two years. Meanwhile, the new revised
plan for development (NPROD) for the Tapi block
is also progressing and is on track for completion
during the second half of FY 2007-08. On successful
completion, NRPOD is expected to produce 5.7 MMSCMD
of gas and about 1,600 BOPD of condensate.
NELP
and Pre-NELP Blocks:
12 exploration blocks were awarded
under the 1st round of the NELP, 4 exploration
blocks in the 2nd round, 9 blocks in the 3rd round,
1 block in the 4th round and 5 blocks in the 5th
round of NELP. RIL has been awarded 7 more exploration
blocks in the financial year ended March 31, 2007,
in the 6th round of NELP. RIL and various partners,
including ONGC Ltd. and Oil India Ltd., were awarded
two exploration blocks prior to NELP. The Company
has also acquired the operating rights of four
exploration blocks from Tullow Oil plc, a UK Company.
During the year 2006-07, RIL made another discovery
in NEC-25 which was seventh in the block. The
well lies in the Mahanadi Basin approximately
12 kilometers north-west of the earlier natural
gas discovery. Based on the evidence of data obtained
from logging and Modular Dynamic Testing (MDT),
the presence of hydrocarbons is confirmed. This
well named Dhirubhai-32 has been notified to the
DGH and the concerned authorities. In an effort
to expedite the process, the development plan
for the first 6 discoveries has been submitted
to DGH for the approval with the gas production
targeted for the year 2012. Based on the upside
potential of the block, options of higher plateau
production from the fields is being evaluated.
Coal Bed Methane (CBM)
Blocks:
RIL's venture into exploration
and production of CBM is the first of its kind
in India and is expected to be commercially operational
by 2010. RIL has exploration and production rights
of five CBM blocks covering an area of about 4,000
sq. kms. The development plans for the Sohagpur
East and West blocks have been submitted to the
DGH for approval.
Overseas Blocks:
RIL has interests in exploration
of overseas blocks, three exploration blocks in
Yemen, two each in Oman and Columbia and one each
in East Timor and Australia covering an area of
about 38,000 sq. km. RIL had oil discoveries in
the on shore Malik 9 block in Yemen. The development
plan for the block has been approved by the Republic
of Yemen and test production commenced in December
2005. In the Oman offshore block where RIL is
the Operator, the existing seismic data has been
collected and 2D reprocessing of data is underway.
RIL has also signed a Technical Evaluation Agreement
with ANH (Columbia's hydrocarbon regulator) and
also entered into a co-operation agreement with
Ecopetrol (National Oil Company of Columbia) for
farm-in opportunities in that country.
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