Reliance sells first KG basin oil to HPCL

Reliance Industries Limited has sold the first crude oil consignment from its eastern offshore Krishna Godavari basin KG-D6 field to Hindustan Petroleum Corporation Limited.

HPCL's Vizag refinery in Andhra Pradesh was to receive the consignment of 65,000-70,000 tonne on November 17, but the ship carrying the oil could not offload it due to bad weather.

"It is clear today and the oil will reach the refinery this evening," a top company official said.

RIL is currently producing 10,000 barrels of crude oil per day from the predominantly gas-rich KG-D6 block.

The MA-1 oilfield started production in September. The company sold the first consignment to HPCL at a $5.34 a barrel discount to Nigerian crude grade Bonny Light.

The official said HPCL would study the properties of the crude oil for appropriate benchmarking.

Thereafter, Reliance may enter into one-year sale contracts. Besides Vizag, Chennai Refinery is also keen on KG-D6 crude, which is likely to peak to 40,000 bpd (2 million tonne a year) in the second calendar quarter of 2009.

In all likelihood, RIL may split the volumes equally between the two. RIL is the operator with 90 per cent stake in 7,645 sq km KG-D6 block, lying off the Andhra coast. Niko Resources of Canada holds the remainder 10 per cent interest.

The official said crude oil from 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.

RIL, which had budgeted $1.5 billion for development of the oil field, has till now spent $950 million and would invest the remainder in drilling and tieing in four additional wells.