17-07-08 Gujarat State Petroleum Corp. (GSPC), a state-run explorer, said a discovery off India's east coast may hold as much as 3 tcf of gas reserves, enough to supply the country's present needs for 2 1/2 years. The discovery was made at the KG-22 well of Deendayal field in the Krishna Godavari basin, where Gujarat State Petroleum found gas in June 2005, Chief Minister Narendra Modi said.
"More discoveries in the Krishna Godavari basin are encouraging both for the company and consumers, but the field's reserve estimates need more study,'' said Nagarajan Narasimhan, head of research at Crisil, the Indian unit of Standard & Poor's. "It takes more due diligence to decide reserves than drilling one or two wells.''

Gandhinagar-based Gujarat State Petroleum and Oil & Natural Gas Corp., India's biggest explorer, had to lower their forecasts for Krishna Godavari last year after their findings based on preliminary drillings were questioned. India's oil and gas regulator cut Gujarat State Petroleum's estimates to 1.38 tcf from 20 tcf.
The estimated output from the Deendayal field will rise after more drilling, spokesman K. Prakash said in July 2007.

Discoveries in the Krishna Godavari basin have been led by Reliance Industries, India' biggest non-state company, and have encouraged other companies to invest in exploration. India is Asia's third-biggest oil consumer and is trying to cut dependence on oil imports that meet 70 % of domestic needs.
Gujarat State Petroleum's two wells are located near Reliance's Dhirubhai 1 and 3 fields. The Reliance fields may together hold an estimated 9.2 tcf of gas, according to partner Niko Resources.

Reliance Industries is investing $ 5.2 bn to develop the field that is expected to more than double the nation's gas consumption. Gujarat State Petroleum plans to invest 40 bn rupees ($ 932 mm) to develop the KG-8 well over three to four years, Saurabh Patel, the state's finance minister, said.
Initial production of 8 to 10 mm cmpd from KG-8 is expected to start in the last quarter of 2010, he said.

More wells need to be drilled before determining the investment needed to develop the KG-22 shallow-water area, Patel said.
Companies classify reserves as proven, possible and probable. Investors rely on proven reserves, the quantity that can be extracted and sold.