RIL has already started commercial sales of the crude oil to refineries on the east coast including HPCL’s Vizag and IOC’s Chennai Petroleum. Currently, sales are done through spot contracts and once oil production reaches a peak of 40,000 barrels a day, RIL will enter into long term contracts with the refiners.

Gas production is expected to commence by January-March 2009, Ambani said. Initially, the output from the D1 and D3 discoveries will be around 15 mmscmd. It will reach a peak production of 40 mmscmd the next year and 80,000 mmscmd in the next 2-3 years. This will be equivalent to India’s current gas production of around 80-85 mmscmd.

Reliance owns 90 per cent of the D6 block and Canada’s Niko Resources has the balance 10 per cent. The company has already made 18 gas discoveries and one oil discovery from the block so far. The price of this gas has been fixed at $4.21 per mmbtu by the government for the next five years. While RIL will sell gas in line with the gas utilisation policy approved by a group of ministers, Ambani said India needed to chart out a roadmap for market-based pricing of gas — similar to that for oil — in the future.

Significantly, the sales of gas from the D6 block are subject to the Bombay High Court lifting a stay order. RIL’s head of oil and gas, PMS Prasad, said the company expects the country’s legal system to take a decision soon. “Someone has to decide whether we need to contain this $20 billion wealth by putting it back to the ground or we want it to fuel the assets, lying stranded and idle for want of gas. I am sure the Court will take a decision soon,” Prasad said. Sources indicated an out of court settlement with Reliance Natural Resources Ltd (RNRL), with which the court battle is on, is unlikely at this point.

... contd.