An investment of $16 billion is proposed by Reliance Industries (RIL) on exploration and production of oil and gas in its fields in the next five years.
The company expects to tap 3-4 trillion cubic feet (tcf) of gas through this investment.
But the company feels that its investment would not be recoverable if the price calculated under the Rangarajan committee formula is adopted.
According to the Rangarajan committee formula, which was approved by the union cabinet recently, the price of gas is expected to be $6.83 compared with the current price of $4.2.
RILÂ’s investment outlay pencils in $6 billion on operating expenses at the existing fields and $3.5 billion for the cost of capital, at an interest rate of 13 percent.
The company would spend around $3.5 billion on its R Series fields and another $2.5 billion on its nine satellite fields.
The output of gas from RILÂ’s D1 and D3 fields has fallen to just over 14 mmscmd from a peak of 69.43 million standard cubic metre per day (mmscmd) in March 2010 with the steep fall attributed to geological complexities, a natural decline in the fields and higher-than-envisaged water ingress.
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