Mumbai: Reliance Industries Ltd will start selling natural gas in the country this year at $25.20 per barrel equivalent of oil - an 80-per cent discount to global prices of over $135 - helping the country reduce imports at record prices.
The Krishna-Godaveri basin gas field will produce 80 million cubic metres of gas a day, saving the country over Rs1,14,000 crore ($27 billion) in annual import bill, chairman Mukesh Ambani told shareholders today.
Reliance will also commission a transmission system for natural gas from the KG basin, off the eastern coast. The soaring cost of exploration and a cap on gas prices may, however, cut Reliance's profit margins.
The government has ordered Reliance to sell natural gas from the KG field for $4.2 per million British thermal units, less than the $4.5 it had sought.
Reliance aims to produce 240-350 million cubic feet of gas a day from the MA-1 field from the second half of the 2008-09 fiscal year, when gas production from two other fields in the block, D1 and D3, will also begin.
Reliance Gas Transportation Infrastructure Limited is setting up an East-West gas pipeline system to connect the country's cities for distribution of gas from the KG basin.
Reliance Industries, which is investing $5.2 billion to develop the KG basin oil and gas fields, the nation's largest, expects to more than double gas output in the country.
Reliance is also aiming to start oil production from its D-6 block in the KG basin in July-August, by the time it commissions its second refinery in Jamnagar, Gujarat.
Commissioning of the 580,000-barrel-a-day refinery will increase Reliance's crude processing capacity to 1.24 million barrels per day, equivalent to about 2 per cent of global capacity, Ambani said.
The new refinery is being built adjacent to Reliance's 660,000-barrel-a-day plant at Jamnagar and the combined facility will be the world's biggest.
Reliance would produce sweet oil with an API density of 43 degrees from two or three wells to meet initial targeted output of 20,000 bpd and has already started inviting bids for sale of the crude.
The country currently imports 70 per cent of its crude oil requirements and doesn't produce enough gas to meet local demand.
Reliance, meanwhile, reported over Rs15,000 crore in net profit for the year-ended March 2008.
Reliance, which enjoys a global market share of seven per cent in the polyester fibre and yarn business, plans to further consolidate its global leadership in polyester with the new 2.5 million tonnes per year Paraxylene manufacturing facility at Jamnagar.