India's Reliance Industries said yesterday that boosting gas output was proving "more complex than envisaged" as it comes under pressure to raise offshore production.
The country's largest private sector firm said it was pressing ahead with attempts to extract gas from the D6 deepwater block, its largest oil field, located off the Bay of Bengal in eastern India.
Increased output is seen as vital for both the company and to fuel India's red-hot economic growth. But it warned: "Based on over two years of production data, the reservoirs appear to be more complex than earlier envisaged. "Continuous and significant efforts are underway for understanding these reservoirs," Reliance said in a presentation to analysts, who have expressed concern about the company's falling gas output.
Efforts are underway to identify (oil) well locations for incremental production and sustenance," the company added in the document posted on its website.
The explanation comes amid growing concerns about Reliance's ability to boost gas production from the field, which has seen the company's stock price underperform.
Reliance, which is seen as a bellwether for Indian stocks, has seen output from the block fall in the past year, prompting talks with India's upstream regulator about how to lift production.
Gas output from the block touched a peak of 60 million metric standard cubic metres a day last year but has since fallen to 50 million, according to Indian energy regulatory officials.
Earlier this year, Reliance chairman Mukesh Ambani signed a multi-billion-dollar tie-up with British energy giant BP aimed at helping the Indian firm develop hard-to-exploit reserves.
BP has agreed to pay $7.2 billion for a 30-percent stake in Reliance's 23 largely unexplored deepwater oil and gas fields, including D6. Fast-growing, energy-hungry India imports around three-quarters of its oil needs but is looking to improve domestic production rates as the economy surges along at around eight percent a year.
Reliance on Thursday reported a record quarterly profit of 53.76 billion rupees ($1.2 billion) for the three months ended March, up 14.1 percent year-on-year, but the increase lagged market expectations.
The disappointing earnings prompted shares in the company to drop more than three percent to 1,006.5 rupees by early afternoon yesterday.