Reliance Industries Limited begins gas production from Krishna Godavari -D6

Finally,the Mukesh Ambani-controlled Reliance Industries has begun gas production from Dhirubhai 1 and 3 discoveries in the KG-D6 block,amidst reports that the company may spend an additional $5.9 billion on developing fields in the Krishna-Godavari basin.

At peak production of oil & gas, the KG-D6 facility would produce over 550,000 barrels of oil equivalent per day. The company had planned to start gas production from September last year and later at the beginning of this year.

As reported by FE on March 2,the company aims at gas production of 80 million standard cubic meters a day(mmscmd) by December-end instead of an original target of 2011.

An RIL release said the initial production of gas from the Dhirubhai 1 and 3 will be sold to existing fertiliser and power companies, which will substantially cut the government’s subsidy burden.

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Air India may give wings to Reliance Fresh

Reliance Fresh, the retail venture of Reliance Industries Ltd (RIL) is seeking to acquire one of ageing cargo aircraft of National Aviation Company of India Ltd (Nacil)—formed by the merger of Air India and Indian Airlines—to service its network of retail outlets.

While both companies have denied any such plan, a source close to the developments said RIL is open to either buying or leasing one aircraft from Nacil’s fleet. Reliance Fresh is likely to invest more than Rs 25,000 crore over the next four years in its retail business.

The reserve price for each of the older Boeing aircraft in Air India’s stable is approximately $60 million, while that of old Airbus aircraft is pegged at $20 million each. Of the 147 aircraft in the Nacil fleet, eight are freighters (all from Air India), including four Boeing 737-200s and four Airbus A310-300s. Reliance Fresh wants to source its aircraft from among these.

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Airbus, Boeing see sharp growth in Indian demand

Despite a slowdown in the economy and the aviation sector, Airbus and Boeing have projected a sharp growth in the demand for aircraft in India. Close on the heels of Boeing predicting that India will need 1,001 aircraft in the next 20 years, Airbus has forecast that the sector will require 1,100 aircraft in the next 25 years.

Says Justin Dubon, regional press manager for Airbus, "India is a promising market for us.

Our forecast takes into account the industry's near-term challenges, including surging fuel prices and slowing air traffic growth. Yet, we foresee a strong demand for aircraft because India is the third largest in terms of purchasing power parity.It is also projected to be the seventh largest economy by 2017." It has predicted that the Indian market will need 1,100 passenger and freighter aircraft valued at $105 billion over the next 25 years. Since 2005, Airbus has bagged over 295 orders from Indian carriers valued roughly at $22billion.

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Oil price heat burns private retailers

The unprecedented increase in crude oil prices, by almost 75% in the last one year, has virtually wiped out the private sector's presence in domestic fuel retailing. Global crude prices rose to $120 a barrel on Monday. This has pushed up the cost of India's import basket to an all time high of $112.56 a barrel, compared to last fiscal's lowest price of $62.91 on May9,2007.

Private sector majors in the fuel retailing space-Reliance Industries Ltd and Shell-have, therefore, begun shutting down most of their petrol pumps across the country. Fuel sales at these outlets have dropped to almost nothing given the huge difference between their prices and those of government subsidised fuel sold at pumps belonging to public sector oil marketing companies IOC, BPC and HPCL.

These three public sector retailers currently sell petrol at a loss of Rs 13.97 a litre and diesel at a discount of Rs 20.97 a litre. However, part of this revenue loss is made up by the government through oil bonds and subsidy share from upstream firms like ONGC and GAIL.

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