Sanjay Roy, senior vice president of exploration and production, said in an investor call after announcing his quarterly earnings on Friday. RIL As per a PTI report, the price range for the sale of KG-D6 gas is expected to exceed the current $9.92 per million British thermal unit.
Notably, the government fixes gas prices every six months based on international rates. Since April 1, gas prices from older or regulated areas more than doubled to a record-high $6.1 per mmBtu, while prices reached $9.92. per mmBtu for difficult areas such as deep sea areas.
Now the next rate revision is scheduled for October.
According to the report, gas prices from old fields of the government-owned Oil and Natural Gas Corporation (ONGC) are expected to increase to around $9 per mmBtu and the limit for difficult fields is likely to rise to double digits.
In fact, RIL has also seen a rise in prices, Roy said, “As we know gas markets are quite tight and prices have gone up and the impact of this we are now seeing in revenue as well as better EBITDA margins “
Going forward, Roy said ceiling prices will increase to $9.92 in the first half (the current fiscal that began on April 1) – which has been notified. And going forward, he said, “we expect to grow from there in the second half of the year.”
During Q4 FY22, RIL’s oil and gas business revenue grew by 136.8% YoY 2,008 crore. Segment EBITDA grew sharply 1,556 crores, with an EBITDA margin of 77.5%. This was mainly due to higher gas price realization in KG D6 and CBM.
In its audit report, RIL stated that production of KGD6 gas during 4Q FY22 was 37.7 BCF (RIL’s share) as against 15.0 BCF (RIL’s share) in 4Q FY21.
While RIL’s average gas price for KGD6 was $6.13/MMBTU in 4Q FY22 versus $3.99/MMBTU in 4Q FY21. CBM gas production stood at 2.4 Bcf in Q4 of FY 2012 and 2.8 Bcf in Q4 of FY 2011. In addition, the price of gas obtained for CBM was higher at $7.64/mmBtu (GCV), nearly 1.5 times that in the fourth quarter of FY2011.
For the first half of FY23, the government has notified a ceiling of $9.92/MMBTU for KG D6 gas.
For the entire FY 2012, Mukesh Ambani’s group earned a revenue of 7,492 crore from oil and gas business grew 3.5 times. Segment EBITDA grew sharply 5,457 crore, with an EBITDA margin of 72.8%.
On the performance of the oil and gas business for FY22, RIL said that it is mainly due to higher production from KGD6 on account of higher gas price realization in KGD6 and CBM with commencement of gas production from R-cluster and sat-cluster fields. Was. Average price realization for KGD6 gas in FY 2012 was $4.92/mmBtu versus $3.96/mmBtu in FY 2011.
RIL along with its partner BP Plc produces about 19 million standard cubic meters of gas per day from two sets of new fields in the eastern offshore deepsea block KG-D6.
Highlighting Reliance-BP’s target of commencing production from the MJ field in the same block by the end of the year, Roy said, “The MJ field is very much on track.” Once the MJ is commissioned, RIL expects production to reach 30 mmscmd in 2023.
Further, Roy said, “We have dug all the wells now and we expect to complete the lower and upper works in the next few months. The FPSO is on track. It is coming together, and we expect That will converge with the completion of the well later this year.”
He explained that despite the challenging conditions due to the weather window, RIL hopes to bring the region on stream by the end of the year.” KG-D6.
Talking about global markets, Roy said the tightness has been compounded by the Russia-Ukraine conflict. He adds, “Now Europe has a lot of competition with Asian consumption when they try to diversify their source from Russian supplies. Europe consumes about 85 million tonnes per year, which is about 85 million tonnes of global supply.” is 1%.”
“So, you know, going a little bit away from Russian supplies is going to make them particularly tight, because there’s no additional capacity coming in at least until 2026,” Roy said during the investor meeting.
Thus, Roy expects the consolidation to continue, and the price to rise. As for India, he said the country has seen a slight decline due to higher prices.
However, he also added that the KG-D6, which has a price range, will be quite attractive due to the low prices as compared to the market prices.
Pointing out that demand remains quite strong, Roy said the forward outlook is that sustained production and increased production based on the KG-D6 sector along with increased prices will add value to the business.
Roy said Reliance-BP is currently producing around 20% of India’s total domestic production and MJ will help it increase to 30%.
After revising gas prices with effect from April 1, Morgan Stanley had highlighted that ONGC may have $3 billion (approx.) 23,000 crore) comes from more than double the cost of natural gas produced by it, while Reliance gets $1.5 billion ( 11,500 crore) more in revenue.
Currently, gas accounts for about 58 per cent of ONGC’s domestic gas production, and Morgan Stanley noted that every $1 per mmBtu change in gas price affects ONGC’s earnings by 5-8%.
In its report last month, Morgan Stanley predicted a further hike of 25% in the next revision scheduled for October 2022 – citing tight supply as the reason for keeping four global benchmark prices higher.