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RIL-BP combine prepares to invest again
Apr 25: The RIL-BP combine is slowly but surely speeding up its investments in offshore E&P blocks.
8In a clear statement, RIL has said that it will continue to keep its depleting D1-D3 and MA fields flowing until production new projects come on stream.
8For equipment and service suppliers, besides ONGC, the eastern offshore is likely to see more orders coming in from the RIL-BP duo.
The following activities is currently on
--Declaration of Commerciality for D55 (MJ) and D29&D30 (Other Satellites) completed.
-- Front End Engineering Design (FEED) for D55 is currently underway
-- Field Development Plans (FDP) for MJ and Satellite Cluster planned for submission in H2,CY2017.
-- R-Cluster Development - Evaluation of bids for long lead items is currently underway
-- NEC-25 block will also see investments as the Declaration of Commerciality has been reviewed by the Management Committee for the D-32 discovery.
8Expect large investments to go through in the offshore E&P segment in India in the next three years. Estimates are that total investments may top Rs 100,000 crore
Comment: Global E&P equipment and service providers are strengthening their presence in India in anticipation of large orders. They understand that the economics of these mostly gas-based blocks are different from that of the rest of the world. Gas production viability will be benchmarked not against global well head prices, but against the landed price of LNG. The  NPVs cross the hurdle rate as a result, despite the higher cost of production of some of these blocks on account of rough weather and challenging geology. RIL will have a relative cost advantage over ONGC as it can use its own under utilized infrastructure created to ferry much higher volumes in the D-6 block. Higher projected price of LNG as the supply-demand gap evaporates after 2020, around the time that some of these blocks will get to production, adds to the momentum
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