Reliance Industries(RELI.NS) and UK partner BP(BP.L) plan joint investment of more than $5 billion over the next three to five years to boost declining output at a key natural gas field off India's east coast.
The D6 block in the Krishna Godavari basin was expected to contribute up to a quarter of the gas supply for Asia's third-largest economy and help to reduce expensive liquefied natural gas (LNG) imports.
However, output from the field has been declining, putting the company under pressure from the government and regulators to increase production, even as it has pushed the government to increase the price it can charge for gas.
The two companies now plan to invest in a series of measures to develop about 4 trillion cubic feet of discovered natural gas from the block, Reliance said in a statement on Tuesday.
Reliance holds a 60 percent stake in the D6 block, while BP has a 30 percent share that it obtained in a $7.2 billion deal in 2011. The remainder is held by Canada's Niko Resources (NKO.TO).
By the end of 2012 fields in the D6 block had produced 2 trillion cubic feet of gas, according to Reliance, which is controlled by India's richest man, Mukesh Ambani. In November Reliance cut its estimate of gas reserves in the block by about two thirds to 3.4 trillion cubic feet.
BP and Reliance said on Tuesday that they would accelerate the pace of exploration and development as soon as approvals are received.
The companies have invested $5.5 billion in the field. A second planned investment of $3.3 billion was scrapped last year because of declining in production at some blocks in the field.
(Reporting by Prashant Mehra, Aradhana Aravindan and Sumeet Chatterjee; Editing by Tony Munroe and David Goodman)