Reliance Industries Limited (RIL) led by Mukesh Ambani may soon share its infrastructure with the state run explorer- Oil and Natural Gas Corporation (ONGC) Limited at Krishna-Godavari (KG) basin in Bay of Bengal.
ONGC has made nine discoveries lying next to RIL owned KG-D6 blocks. According to an internal study, ONGC has lined up a total expenditure of $9 billion for the block by 2030. However, if this deal materializes ONGC will hit two birds with a single shot. It will save capital expenditure of around $4-5 billion and ONGC will also be benefited by the ease of sharing RIL’s gas processing and transportation facilities for the KG basin. The deal will also include RIL’s gas gathering station which helps to take the fuel to land and its processing plant in Andhra Pradesh.
There are speculations that recently discovered D-55 field in RIL’s KG-D6 basin may hamper the deal. These infrastructure plans may not materialize if RIL wants its assets to focus on its un-utilized gas field, D-55. However, an official who has been involved in looking after the processes in the deal claims that the energy giant is keen to take forward the deal. “We think RIL will come on board as it is a win-win situation for both companies. This is not unprecedented and happens globally” said the official.
Throwing more light on the deal, an ONGC official said, “We might have to pay only for the toiling charges of transporting gas through RIL’s pipelines, transmission systems, controls, etc, these assets are as good as owned by the government.”
Previously, ONGC was also in talks with Reliance to hire its’ unutilized production facilities on the east to quickly bring to production its gas finds in the KG-basin. At that time, the talks were about using RIL’s gas gathering station only. ONGC Chairman and Managing Director had said,” We have started talking to them on that… they (RIL) are open to that. It makes lot of economic sense to share the infrastructure.”
“It makes sense to all of us. Their (RIL) facilities are lying redundant and we are in need of infrastructure to produce our gas.” Vasudeva said. ONGC found block in KG-DWN-98/2 will be operational by 2016-17 with a peak production of 22 mmscmd.