Reliance shuts down offshore oil field in Krishna-Godavari basin

Talal Husseini 21 September 2018 (Last Updated September 21st, 2018 14:23)

Indian energy company Reliance Industries has closed down operations at its offshore oil and gas field in the Krishna-Godavari (KG) basin, on the eastern coast of India, after signs of natural decline in output.

Reliance shuts down offshore oil field in Krishna-Godavari basin
Reliance has shut down production at its MA field, located in the Krishna-Godavari basin offshore India, after signs of a natural decline in output. Credit: World Economic Forum.

Indian energy company Reliance Industries has closed down operations at its offshore oil field in the Krishna-Godavari (KG) basin, on the eastern coast of India, after signs of natural decline in output.

The MA field was Reliance’s first venture into oil and gas exploration, which began producing oil in September 2008.

A statement from Reliance said: “Production from the field had been under natural decline and facing continuous challenges due to high water production and sand ingress. The field has cumulatively produced about 0.53 trillion cubic feet of gas and 31.4 million barrels of oil and condensate and had no remaining reserves.”

Primarily an oil-producing field, MA is one of three oil and gas fields that the company operates in the Bay of Bengal’s KG basin.

The remaining fields, known as D1 and D3, started producing natural gas in April 2009. Output from all three fields began declining rapidly after reaching a peak of 30,000 barrels per day of crude oil and 60 million cubic metres per day of natural gas.

The company’s owner, and India’s richest man, Mukesh Ambani, originally said the fields would produce almost 45% of India’s oil and gas needs by 2010, and would save the country $20bn from reduced imports.

Reliance has since faced uninspiring results from the offshore oil field, in part due to the failure to manage the geographical challenges of deepwater production.

The floating, storage, production and offloading (FPSO) vessel Dhirubhai-1, which was under a ten-year contract on the MA field, expired on Wednesday, and its owner Ocean Yield was informed by Reliance that it will not be renewing the contract, nor exercising its option to buy the FPSO for $255m.

Ocean Yield CEO Lars Solbakken said: “The FPSO Dhirubhai-1 has during the ten-year contract with Reliance Industries had excellent operational utilisation and has been maintained to a very high standard. Based on an improved outlook for the FPSO market, we are optimistic that we will be able to find a satisfactory solution for the unit.”

After a ten-year hiatus, Reliance confirmed in its annual report that it planned to invest $4bn in developing new prospects in the KG basin together with its partner BP, which is projected to produce up to 35 million cubic metres per day of gas between 2020 and 2022.