Reliance Industries Ltd.

The natural gas production from Reliance Industries Ltd’s (RIL) East Coast Block will reduce the country’s oil import bill on an annualised basis by $9 billion during peak production at current prices. This is approximately 0.9 per cent of India’s GDP. The country’s import bill for oil and oil products is estimated to be over $ 90 billion in 2008-09.

The project is estimated to generate revenue of $42 billion over the life of the fields (11 years) at the current gas price ($4.2/mBtu). The Government’s share is likely to be $14 billion (in form of profit petroleum and royalty). During the financial year 2009-10, the project will generate estimated revenue of $2 billion.

With the peak production of 80 million standard cubic metre a day (mscmd), the D6 Block in Krishna Godavari Basin, will nearly double the country’s domestic gas production and constitute about 44 per cent of current oil and gas production. In oil equivalent terms, it will amount to about 29 million tonne per annum (mtpa). The D6 gas is estimated to contribute about a sixth (1/6th) of the total domestic petroleum and gas consumption.

Reliance has a 90 per cent interest in the block, while Canada’s Niko Resources holds the rest. RIL started production with an output of 2.5 mscmd (on Wednesday) and will gradually increase it.