BP and Indian private-sector firm Reliance Industries (RIL) plan to start production of natural gas from deepwater fields off the coast of east India at the end of June but may be further delayed if the Covid-19 lockdown persists.
The companies will inform buyers of its fuel about delivery dates, an RIL official said. The end-June date is already later than the previous target for first gas. First gas from BP and RIL's $5bn R-Series deepwater fields in the KG-D6 natural gas block will be produced in May, BP chairman Bob Dudley said at the India Energy Forum in Delhi in October. RIL and BP, which are jointly developing R-Cluster, satellite fields, and MJ by 2022, have awarded a tender for 5mn m³/d of gas to buyers including the Essar group, Adani group and state-run gas distributor Gail. The three areas will together produce over 30mn m³/d at peak, which will account for around 38pc of India's current gas output.
Brent crude, a benchmark for the R-area contracts, traded at more than twice that of current levels when RIL and BP awarded the tender in November. The minimum price of the offered gas was 8.4pc of Dated Brent crude, which worked out to around $2.20/mn Btu if supplies start in July. That is lower than even the $2.39/mn Btu rates fixed by the government for conventional gas produced by state-controlled upstream firms in April-September. The ceiling rates of gas from deepwater, ultra-deepwater, high-temperature and high-pressure areas, as in the case of RIL's finds, were set at $5.61/mn Btu. Argus on 4 May assessed prices for spot LNG deliveries to India at $1.63/mn Btu and $1.80/mn Btu for first- and second-half June respectively.
LNG imports in March increased by 20.4pc to 2.86bn m³ from a year earlier, according to oil ministry data. Fertilizer plants consumed 800mn m³ of imported LNG last month followed by refineries at 631mn m³. City gas used 401mn m³ of imported fuel, chemical plants 272mn m³, power plants used 149mn m³ and other industries 282mn m³.
