26-06-08 Reliance Industries Ltd. (RIL) will begin oil and gas production from its eastern offshore D6 block in the third quarter (July-September) of the current year, Niko Resources, its junior partner, said in a regulatory filing.
''Oil and natural gas production is expected to commence in the third calendar quarter of 2008," the Canadian company said in its filing. Niko holds a 10 % stake in the D6 gas and oil block.

Reliance will commence production at the Dhirubhai-1 and 3 gas fields and the MA oil fields in the Krishna-Godavari (KG) basin in the KG-DWN-98/3 (D6) block. Reliance is investing around $ 5.2 bn to bring production from the gas and oil fields, which are among the 18 such finds in the KG basin.
Reliance and Niko will invest $ 1.5 bn for oilfield development and nearly $ 3.6 bn in the second phase of gas development, Niko said. Gas production from the block is expected to be around 80 mm standard cmpd in the first year of production while peak oil output will be around 40,000 bpd.

The government, meanwhile, has asked Reliance Industries to supply natural gas from its KG-D6 field first to fertiliser units, LPG plants and the existing power plants, on a priority basis. The government expects Reliance to pump 25 mm cmpd of gas from the D6 block from September and 40 mm cmpd from March 2009.
Under the guidelines for gas allocation, approved by an empowered group of ministers and notified by the petroleum ministry, Reliance Industries will supply natural gas from the KG-D6 field first to fertiliser units, LPG plants and the existing power plants on a priority basis. Companies producing gas from areas awarded under the New Exploration Licensing Policy (NELP) would have to sell the fuel in accordance with the marketing priorities determined by the government.

The government has asked RIL to first supply gas from the KG-D6 field to the existing gas-based urea plants, which are now getting fuel below their full requirement.
A maximum quantity of 3 mm cmpd would also be supplied tothe existing gas-based LPG plants and thereafter up to 18 mm cmpd to such gas-based power plants that are lying idle or are running below capacity or are likely to be commissioned in 2008-09 and to liquid fuel plants which could switch over to natural gas.