Reliance's Upstream Revenue in 1Q FY17 Declines 34.8% YOY to $200M

India's conglomerate Reliance Industries Ltd.'s upstream oil and gas business posted a 34.8 percent fall in revenue for the first quarter of financial year 2017 (1Q FY17) to $200 million (INR 13.4 billion), down from to $240 million (INR 16.34 billion) in the previous year. The decline was due to lower domestic production and sharply lower oil and gas prices in its local and U.S. shale segments, the firm said in the release of its quarterly results Friday.

Revenue for Reliance's domestic exploration and production (E&P) operations stood at $120 million (INR 7.83 billion), a 34.8 percent year-on-year decline from 1Q FY16's $180 million (INR 12 billion), with the fall resulting from lower oil/condensate prices and a decline in gas production from the KG-D6 block.

The firm also incurred a 34.9 percent decline in its U.S. shale oil and gas business to $80 million (INR 5.56 billion) from 1Q FY16's $130 million (INR 8.54 billion). The recovery in condensate prices was partly offset by marginally lower natural gas prices. 

Turning to the KG-D6 field, Reliance said the joint venture has submitted a Declaration of Commerciality (DoC) report of D-29 and D-30 discoveries to its Management Committee, while a side-track campaign for two wells in MA field has commenced. Meantime, the firm has relinquished Block CYD5 as the D56 discovery is "techno-economically challenging for development and consequently assessed to be non-commercial."

Over at the Panna-Mukta and Tapti development, Reliance reported higher production in 1Q FY17 from the Panna-Mukta fields, comprising 1.7 million barrels of crude oil and 17.0 billion cubic feet of natural gas, up 8 percent and 2 percent year-on-year. The firm said the gains were due to higher production from Mukta-A field, better than expected increase fom work-overs of Panna-B wells and production from the Mukta-B field development. Following for the cessation of production in Tapti in March, processing facilities and export pipelines have been handed over to Oil and Natural Gas Corp. Ltd. (ONGC).

With regards to its coal bed methane (CBM) and Shahdol-Phulpur Gas Pipeline projects, Reliance said test gas production from Phase I facilities of Sohagpur West Block Gas has commenced from GGS (Gas Gathering Station) GSS 11 and 107 well-sites, while GGS 12 is likely to be ready for start-up by 3Q FY17. One WGS (Water Gathering Station) has been completed and work is ongoing for three WGS in GGS 12, while infield pipeline laying work is in progress. Reliance also indicated that testing, pre-commissioning activities are in progress for Shahdol-Phulpur pipeline.

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