New Delhi/Mumbai: The energy regulator Directorate General of Hydrocarbons (DGH) said on Wednesday Reliance Industries’ gas output could go up to 67 million metric standard cubic metres a day (mmscmd) by April, earlier than expected, boosting shares in the company.
Reliance, which produces 53 mmscmd from D6 block in the Krishna-Godavari basin, off India’s east coast, is expected to drill four more wells by next month to raise output, director general of DGH S.K. Srivastava told reporters.
The news lifted shares in India’s largest-listed company, extending gains to as much as 2%. By 2:35 pm, the stock, valued by the market at $71.7 billion, was up 1.1% at Rs995.
“The number is higher than earlier estimated. The sentiment for the stock is positive because the market thinks the ramp up (in production) will be sooner than expected,” said Vinay Nair, sector analyst at Mumbai’s Angel Broking.
The energy giant posted its highest-ever quarterly profit in January as refining margins surged, but concerns over the group’s gas production have for months dampened the growth outlook for the company.
Reliance is currently pumping less than the 60 mmscmd it produced last year, and far lower than its peak capacity of 80 mmscmd. Although the upstream regulator had earlier indicated output could rise by April, there had been doubts.
Reliance, controlled by Asia’s richest man Mukesh Ambani, last month sold stake in 23 oil and gas blocks to BP in a $7.2 billion deal, in part to benefit from BP’s technical expertise in deepwater exploration.
“As per the plan submitted to us, their output from D1 and D3 fields will be 59 mmscmd and (another) 8 mmscmd from MA1 field in April,” Srivastva said.
“Reliance’s field development plan says they will bring online four more wells,” he said, adding of these, two were drilled and are waiting to be connected.
Reliance is expected to reach peak capacity of 80 million cubic metres a day from the KG basin blocks by 2013, a delay of nearly two years to its original plan.