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UK-based BP and its partner Reliance Industries (RIL) have commenced drilling on a new satellite discovery in the KG-D6 block, offshore of the Bay of Bengal.

It took nearly 16 months for BP to spud its first well after investing in RIL due to various regulatory objections from the Oil Ministry, reported The Economic Times, citing sources close to the development.

Earlier in July 2011, BP obtained the Indian Government’s consent to invest $7.2bn for a 30% stake in 21 oil and gas production sharing contracts (PSC) belonging to RIL, including gas discovery blocks of KG-D6 in Krishna-Godavari basin and NEC-25 in the Mahanadi Basin.

The block’s managing committee, headed by India’s Directorate General of Hydrocarbons (DGH), initially approved an optimised field development plan for four satellite gas discoveries, including D-2, D-6, D-19 and D-22 in the KG-DWN-98/3 block, at the beginning of 2012.

The ministry later withheld its approvals in the wake of objections raised by the Comptroller and Auditor General of India (CAG) when RIL did not provide access to records of the KG-D6 block, pushing the project into a controversy.

In a fresh move in August 2012, the committee granted conditional approval to the budget and work programmes for the D6 field as compensation for the declining offshore gas production from KG-D6, followed by BP completing the stake acquisition.

BP-RIL started drilling the well in December 2012 when the weather window was reopened following the loss of a previous four-month weather window due to the absence of approvals.

The newly spud KG-D6-G2 well, called Satellite-1, on the D-19 discovery is part of the eight gas wells proposed for drilling within the four discoveries as part of the $1.529bn development plan.

"It took nearly 16 months for BP to spud its first well after investing in RIL due to various regulatory objections from the Oil Ministry."

Production from the four gas fields is expected to reach 10.30 million standard cubic metres a day (mmscmd) once it begins in mid-2016.

It is also estimated that these fields have recoverable reserves of 617 billion cubic metres out of an in-place reserves of 1.343 trillion cubic feet.

All four fields are located near the now producing Dhirubhai-1 and 3 (D1&D3) fields, in the 8,100 square kilometre KG-DWN-98 / 1 (KG-D6) block exploration, which together have estimated gas reserves of about eight trillion cubic feet.

RIL also discovered in March 2003 that the fourth field, Dhirubhai-4, possesses in-place gas volumes of 1,700 billion standard cubic feet.

Output from the main D1&D3 fields, which dropped to 19mmscmd from 55mmscmd achieved in August 2010, is expected to get a boost from the four satellite fields.

Reliance Industries is the operator of the KG-D6 block holding a 60% stake, while BP and Niko Resources own 30% and ten percent respectively.

Image: The proposed four discoveries are adjacent to the producing fields of the KG-D6 block.