RIL’s D-1, D-3 fields to hit peak output of 80 mmscmd in 2012-13

New Delhi: Reliance Industries’ (RIL) prolific D-1 and D-3 gas fields off the east coast, which have seen a 15% drop in production in recent times, are likely to touch a peak output of 80 million metric standard cubic metres per day (mmscmd) in 2012-13, reports PTI.

According to a Directorate General of Hydrocarbons (DGH) report to the oil ministry, the Dhirubhai-1 and 3 fields—also known as D-1 and D-3—in the KG-D6 block are likely to produce 80 mmscmd of gas for six years, from 2012-13 to 2017-18.

Together with gas output from the MA field in the same block, KG-D6 production in 2012-13 will touch 88.5 mmscmd, the report said.

The MA field currently produces about 8 mmscmd out of KG-D6's total output of around 54 mmscmd.

According to the production profile prepared by the DGH, production from KG-D6 will be 86-87 mmscmd between 2013 and 2016 before dipping to 81.24 mmscmd in 2017-18. Subsequently, the output will gradually taper down to less than 40 mmscmd by 2020-21.

Sources said the D-1 and D-3 fields have seen output fall from 53-54 mmscmd in mid-2010 to 45-46 mmscmd at present.

D-1 and D-3 are the largest among the 20 oil and gas finds that Reliance and its Canadian partner Niko Resources have made in the KG-D6 block, also known as KG-DWN-98/3, in the Krishna-Godavari Basin, off the Andhra Pradesh coast.

Besides D-1 and D-3, the D-26 or MA oilfield in the same block is producing about 8 mmscmd of associated gas.

Cumulatively, the output from KG-D6 currently stands at around 54 mmscmd.

Earlier this year, the KG-D6 block hit a peak production rate of 60 mmscmd after which output has fallen, sources said, adding that the DGH has projected an output of 60.16 mmscmd in 2011-12.

As per the approved Field Development Plan (FDP), the D-1 and D-3 gas fields—which began gas production in April last year—have a field life of 13 years, with a plateau period of six years.

“The reservoir is a complex reservoir and has not behaved as previously modelled,” a source said.

Reliance has been forced to restrict oil production from the MA field to under 20,000 barrels per day (bpd) due to high water and gas output, sources said, adding the field was yielding more water than oil and even 8 mmscmd of gas in comparison to 20,000 bpd of oil was considered quite high.

Sources said Reliance will have to drill more wells to boost output to the approved peak of 80 mmscmd. Currently, 18 wells on D-1 and D-3 have been completed and hooked up to the production system, but only 17 are producing gas.

The company is currently selling 14.5 mmscmd of gas produced from the KG-D6 block to fertiliser plants, 26.5 mmscmd to power plants and the remaining 13 mmscmd to other sectors like sponge iron plants, LPG, city gas distribution (CGD), petrochemical plants and refineries.


JSW takes over Ispat Industries

The saga of continuing losses at Ispat Industries and repeated fund injection by banks and financial institutions is over. It is reliably learnt that JSW controlled by Sajjan Jindal has clinched the deal to acquire Ispat Industries.

The promoters of Ispat Industries, Promod and Vinod Mittal, who have been struggling to keep the plants of Ispat Industries running since October and pay salaries on time, has finally thrown in the towel.

It is reliably learnt that the consortium of banks, which lent a helping hand to Ispat for over a decade, has now finally got the Mittals to relinquish control over Ispat in favour of Sajjan Jindal controlled JSW Steel, India's third-largest steel producer.
A meeting of lenders, which includes IDBI, ICICI Bank, IFCI and State Bank of India and others, has been called on Monday to implement this decision.
According to sources close to the transaction, JSW Steel and entities controlled by Sajjan Jindal, are buying 45.5% stake in Ispat Industries through a fresh issue of shares. This will trigger an open offer. After the deal, Mittal (mainly Vinod Mittal) and family will continue to hold close to 26% in Ispat.
Moneylife reported on 1st December that Ispat was facing in an acute cash crunch, which forced the closure of the company's electric arc furnace in Dolvi, Maharashtra, which has a capacity to make 3.3 million tonnes of steel and also the cold rolling and galvanizing mill at Kalmeshwar, near Nagpur.
A sell-out by the Mittals at this stage was inevitable, as Moneylife has been hinting in its various reports in December. After almost two decades of severe mismanagement, Ispat has been way behind in meeting every commitment to the lenders.
In a remarkable case of management failure, Ispat has posted losses for each of the past five years except 2008, a period which saw a steel market booming worldwide, leading to highest ever steel prices.
With over Rs7,000 crore debt on its books, Ispat Industries has been under a Corporate Debt Restructuring (CDR) plan.
However, the company has been failing quite miserably to stick to its commitments. A report of the lenders dated 22nd October says that the Lenders' Monitoring Committee (LMC) "felt that in order to bring financial discipline in the company, TRA mechanism should be strictly implemented immediately and close monitoring for the same is required by the TRA bank, viz. SBI." (TRA stands for Trust and Retention Account.) The report goes on to state that "the company was directed to submit expenses budget on a monthly basis in advance in respect of subsequent month to the lenders for their examination and approval by the LMC for effective monitoring of TRA." The report goes on to discuss the various compliance steps that Ispat has failed to take as part of the CDR.

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V Jayaraman

6 years ago

This is a classic case of allowing drowning public money into the ocean. I am sure in the scheme of things which shall be sought by JSW Steel, they would look for good amount of haircuts on the IIL loans. This would erode profitability in a big way for lenders like ICICI Bank, SBI etc. This would also allow Mittals to keep intact with them the real estate company having building in Pedder Road, Mumbai. With this merger talk, the Banks / Institutions should seize the opportunity of Mittals going ahead and gaining from the real estate project. I fail to understand why should Mittals should hold 26% and issue fresh shares to JSW Steel. Instead, the lenders should have insisted that Mittals offload their portion to JSW Steel or in the alternate allow the pledged shares of Mittals with Banks / FIs to be handed over to JSW Steel. Hapless minority shareholders can stand in queue in the next AGM of IIL. JSW Steel shall bring laddoos from Tirupati and shall distribute to minority shareholders of IIL (in lieu of dividend which cannot be dreamt of atleast for the next 5 years).

What sealed Ispat’s fate?

While the Mittals brothers had run out of options to raise more cash, the financial institutions were facing Rs10,000 crore of bad loans and JSW was keen to wrap up the deal 

Three things seem to have sealed Ispat Industries Ltd’s (IILs') fate – firstly, pressure from government agencies, especially the Income Tax department that recently conducted nationwide raids/searches on the company and its promoters. Secondly, lenders are under severe pressure because they would have to declare over Rs 10,000 crore of outstanding borrowings as bad loans if some solution was not found before 31st March. Also, with the loan-for-share scam having badly burned lenders such as Life Insurance Corp of India (LIC) and LIC Housing Finance, even the most sympathetic lenders were scared to bend the rules for the Mittal brothers once again. Finally, IIL was unable to pay salaries and utility bills and it was clear that any delay in selling the plant would have led to vandalization and reduced value.
All this cornered Pramod and Vinod Mittal and created an environment that was ideal for potential acquirers to mount pressure on bankers as well as through political contacts. We learn that even between the two siblings, Vinod Mittal was ready to walk out if he got a good deal.
Good for the Industry
With a large, weak player being taken over by a strong group, the prospects of the steel industry have dramatically brightened, say insiders. Indian steel prices, especially hot rolled coils (HRC), have often quoted below international prices because IIL, perennially short of cash would often sell at a discount to the market prices. Industry now expects prices to move up to market determined levels. One major factor that may turn out to be a worry is that henceforth, the Jindal group along with the Essar group (earlier a major defaulter itself) will now control over 70% of the market for HRC – a product that is used to make consumer durables like cars, washing machines etc.

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