India's Reliance Industries has shut down an oil and gas field in the offshore Krishna-Godavari basin after its production rates began to decline several months ago, the company said in a regulatory filing. The field yielded first oil back in 2008.
The Indian heavyweight partnered on the field with BP and Canada-listed Niko Resources.
"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 cu ft of gas and 31.4 million barrels of oil and condensate and had no remaining reserves," the statement read.
India's government has been putting a lot of efforts recently to increase the domestic production of crude oil as it seeks to reduce its overwhelming dependency on imported crude, which accounts for more than 80 percent of the national consumption.
The problem has become particularly pressing in recent months as rising oil prices combined with a falling rupee to cause India's imported oil bill to balloon and spark protests against high gas prices at the pump.
India is also Iran's second-largest oil client, which means that U.S. sanctions that return in early November would further aggravate the situation as local refiners seek ways to continue importing Iranian crude, which sells as a considerable discount.
Regarding Reliance's decision to stop pumping oil from the MA field, Reuters recalls how, when the company decided to enter the oil and gas sector, its chief, Mukesh Ambani, had promised that Reliance would produce 45 percent of India's oil by 2010, saving the country some US$20 billion from imported oil.
Despite the MA's production decline, the company is not leaving the Krishna-Godavari basin altogether: in its annual financial report released in May, Reliance said it will invest, together with BP, some US$4 billion in new exploration, planning to produce 35 million cu ft of natural gas daily between 2020 and 2022.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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