Reliance, BP to Invest US$5 Bn in India Gas Block

Reliance Industries said the company and its partner BP Plc plan to jointly invest more than US$5 Bn over the next three to five years to boost output at a key natural gas field off India's east coast.

The D6 block in Krishna Godavari basin is jointly operated by the two energy companies and was expected to contribute up to a quarter of the gas supply for Asia's third-largest economy, but output from the block has been declining.

The two companies are planning to invest in a series of projects to develop around 4 TCF of discovered natural gas resources from the block, Reliance said in a statement.

The current output from the field is about 19 million standard cubic meters a day, less than a fourth of the initial target.

A government panel last month recommended that New Delhi scrap the system of setting natural gas prices based on the fields from where it is produced in favor of a uniform pricing model. The government hasn't yet approved the recommendation which will lead to higher prices.

Reliance currently sells gas from the block at $4.2 per million British thermal unit. The price will come up for revision in April 2014.