RIL sub-lets sole drilling rig to Malaysia's Petronas

Reliance has sub-let its Transocean-owned ultra-deep water drillship Dhirubhai Deepwater KG-2 to Petronas at least till the year-end, industry sources said.
Dhirubhai Deepwater KG-2, a high specification ultra-deep water drillship capable of operating in 12,000 feet of water and drilling to 35,000 feet, may drill two wells for Petronas off the coast of Brunei, beginning next month, which may take up to four months to complete.

Following the move, Reliance does not have any operational offshore drilling rigs in Indian waters, sources said.

Reliance had in March last year received Dhirubhai Deepwater KG-2 from Transocean on a five-year contract at a day rate of USD 510,000, sources said, adding that the Mukesh Ambani-led firm is charging the same day rate from Petronas.

A company spokesperson did not reply to an email sent for comments.

Reliance has not drilled all of the wells it had committed in 2006 to win approval for investing up to USD 8.8 billion on its showpiece eastern offshore KG-D6 block.

Natural gas production from the block, at 47 million cubic metres per day, is 31 per cent less than the target, a phenomenon which the oil regulator, the Directorate General of Hydrocarbons (DGH), says was on account of not drilling the required number of wells.

Reliance has so far drilled only 20 out of the 22 wells committed by March, 2011, in the main Dhirubhai-1 and 3 gas fields of the KG-D6 block. As per its 2006 commitment, the number of producing wells should go up to 31 by the end of the current fiscal.

Sources said without a drilling rig, it cannot drill any well this fiscal.

The DGH wants Reliance to immediately take up drilling of the 11 committed wells so as to raise output, which had in March last year touched 61 mmcmd. Production has since late last year declined amid falling pressure in the wells.

Reliance currently holds 90 per cent interest in KG-D6, while the rest is with Niko Resources of Canada. It is selling a 30 per cent stake in the block and 22 others to UK's BP Plc for over USD 7 billion.

In 2009, Reliance had sub-let another rig, Dhirubhai Deepwater KG-1, to state-owned Oil and Natural Gas Corp (ONGC) at a dayrate of USD 495,000 to 510,000 for four years (about Rs 3,195 crore).

ONGC was to pay a day rate of USD 495,000 to Reliance for the first 180 days and USD 510,000 from the 181st day onward.