Reliance has started production as global oil majors are facing diminishing new discoveries
Reliance Industries (RIL) on Sunday formally announced the commencement of production from its famous Krishna Godavari D6 upstream assets six years after it discovered gas in deep sea off the Andhra coast.
"This accomplishment marks a strategic and emotional inflection point for every Indian. It proves that we can disprove the naysayers of the world, who had written off India's ability to produce its own oil and gas," Mukesh Ambani, one of the world's richest men said on Sunday.
The first-of-its-kind production from a deepwater field in India started on September 17 and comes 40 years after Bombay High was discovered by ONGC.
Initially, RIL will produce 5,000 barrels of crude a day, which will later rise to the peak level of 5.5 lakh barrels of oil equivalent per day. At this level, it could save the country nearly $20 billion in foreign exchange every year.
Pulling oil from 2,400 metres beneath the cyclone-prone, choppy waters of the Bay of Bengal is a technological feat, the sort of high-tech, high-cost deep-water drilling that was once the province of just a few of the world's top oil companies.
It also comes at a propitious time for India, the world's fifth-largest energy consumer.
The country imports about three quarters of its oil and has been staggering under growing oil and gas import costs and an onerous oil subsidy bill.
Within 18 months, oil and gas production from block D6 of the Krishna Godavari basin will increase India's domestic production by 40 per cent, potentially shaving about $20 billion US from the nation's $77 billion oil import bill, according to Reliance officials.
The company says the 7,650 square-kilometre block holds 2.5 billion barrels of oil equivalent, 80 per cent to 85 per cent of it natural gas.
India still ranks low on the list of oil-producing countries, and the find is unlikely to put a big dent in global demand for oil, which the International Energy Agency pegs at 86.8 million barrels per day.
But Reliance insists this is just the beginning. "India is not short of hydrocarbons. It just hasn't been explored well," P.M.S. Prasad, president of Reliance's oil and gas division, said Sunday.
Reliance controls 40 exploration blocks in India, including several more in the Krishna Godavari basin.
Ambani called the start of production a "major victory" for India in its battle for energy security. "We can now confidently look forward to production from a series of other fields," he said.