Reliance resumes crude oil production from KG-D6

Reliance Industries has resumed crude oil production from its predominantly gas-rich KG-D6 block after a three-month shutdown, which was forced by an equipment failure.

"Oil production from the MA field in the KG-D6 block restarted on March 8," a source said.

The field pumped about 5,000 barrels of crude oil on the restart as the company tested equipments and systems.

Output may rise to 10,000-12,000 barrels per day (bpd) by the month-end, when the field would be shut again for 45 days to hook up more oil wells.

The MA field in the Krishna Godavari basin block off the Andhra coast, began pumping oil in September 2008 and had produced 790,000 barrels of oil till December 9, when output ceased due to equipment failure.

"Production recommenced last week after completion of necessary repairs and modification," the source said. Gas from the block is also expected to start flowing by March-end.

Reliance was producing about 10,000 barrels of oil per day from two wells before the shutdown and it would add another well this month to raise the output.

The source said three more wells are likely to be brought into production when the field takes the planned shutdown in March-end or early April. "Output is expected to rise to 40,000 bpd before the end of the April-June quarter."

Reliance is the operator with a 90 per cent stake in the 7,645 square km D6 block, off the Andhra coast. Niko Resources of Canada holds the remaining 10 per cent interest.

Company spokesperson, however, could not be contacted for comments.

Reliance had sold the first cargo of over 430,000 barrels of oil to Hindustan Petroleum Corp Ltd's Vizag refinery and the second cargo is slated to go to Chennai refinery CPCL.

CPCL has contracted 450,000 barrels of oil from Reliance at a discount of $5.34 a barrel to the internationally traded price of Nigerian Bonny Light crude oil. The price is the same that was offered by HPCL.

ONGC also benchmarks its prime Mumbai High crude at this grade.

The source said Reliance has almost 360,000 barrels of oil in its inventory and would deliver the second consignment to the Chennai refinery before March-end.

Reliance had initially said that MA field would be out of operation for 3-4 weeks but the outage had to be extended as some design changes had to be made on the floating, production, storage and off-loading vessel to which oil is pumped from the wells.

Crude oil from the MA-1 field is stored on a floating, production, storage and off-loading vessel at the well-head and once critical volumes are reached it is transferred to a ship for transportation to a refinery.