Reliance's D6 output may fall to 27 mmscmd - source

Reliance Industries' KG-D6 facility located in Andhra Pradesh is pictured in this undated handout photo.

NEW DELHI (Reuters) - Gas output from Reliance Industries' (RELI.NS) D6 block may be 66 percent lower than the initial estimate from April, government sources said, forcing the country to resort to increased imports of expensive liquefied natural gas (LNG).

The D6 gas output will decline to 27 million cubic meters a day (mmscmd) from April, compared with 37-38 mmscmd now, an oil ministry source said on Tuesday.

Separately, another government official said as per the approved development plan Reliance was expected to produce 80 mmscmd from April.

Reliance, India's biggest company by market value, is under pressure from the government and investors because of the falling output from its Krishna-Godavari D6 gas fields, off India's east coast.

Output from the block declined as Reliance drilled fewer wells than planned and six wells ceased to produce due to the entry of sand or water, the government said in December.

This has resulted in a sharp fall in India's local output of gas and prompted the country to hunt for liquefied natural gas overseas to meet the growing demand of an expanding economy.

Reliance's market value tumbled 35 percent in 2011 because of worries about falling gas output, and the stock underperformed the main Mumbai market .BSESN, which fell nearly 25 percent in the same period.

Canadian oil and gas producer Niko Resources Ltd (NKO.TO), which holds 10 percent in the Reliance-operated D6 block and posted a quarterly loss due to the reduced production in the block, earlier this month warned that output decline could continue at the site.

Reliance last year tied up with BP (BP.L) to develop the D6 block, and the British firm has said production from the field could rise from 2014.

Shares of Reliance Industries on Tuesday closed at 848.9 rupees, down 0.04 percent.

(Reporting by Nidhi Verma; Writing by Ratnajyoti Dutta; Editing by Rajesh Pandathil)