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Mumbai: Reliance Industries Ltd, India's largest company by market value, will start selling natural gas this year at the equivalent of a fifth of global prices, easing the nation's import bill at a time of record crude oil costs.
Reliance will sell gas at $25.20 a barrel of oil equivalent, compared with more than $135 in global markets, Chairman Mukesh Ambani told shareholders yesterday. Piping the fuel from the Krishna Godavari basin off India's eastern coast will cut Rs1.14 trillion ($27 billion, Dh99 billion) from the country's import bill, he said.
Reliance Industries is investing $5.2 billion to develop Krishna Godavari (KG) basin, the nation's largest field that is expected to more than double India's gas output.
Demand
India, Asia's third-biggest economy, imports 70 per cent of its oil and doesn't produce enough gas to meet demand from power and fertiliser makers.
The group's petroleum unit will also commission its new refinery "earlier than scheduled" in the second half of this year, Ambani said. Completion of the refinery will increase Reliance's ability to process crude oil to 1.24 million barrels per day, equivalent to about two per cent of global capacity, he said.
The 580,000-barrels-a-day Jamnagar refinery is being built adjacent to an existing 660,000-barrels-a-day plant owned by Reliance. The combined facility will be the world's biggest, according to the parent.
The soaring cost of hiring rigs and exploration equipment and a government cap on gas prices may curb Reliance's profit from the new field in the Bay of Bengal that will produce 80 million cubic metres of gas a day.
The government has ordered Reliance to sell natural gas from the Krishna Godavari field for $4.2 per million British thermal units, less than the $4.5 it had sought. Reliance has installed 110,000 metric tonnes of offshore equipment and has completed 90 per cent of all onshore production infrastructure, Ambani said.
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