Reliance Industries is re-thinking its plans to undertake a $10 million feasibility study to develop a liquefied natural gas project in South Iran.

This comes in the wake of the company itself striking gas in the Krishna-Godavari (KG) basin, off Andhra Pradesh coast. The KG discovery is said to be India's largest gas find in nearly three decades.

Reliance had signed a memorandum of association with British Petroleum and the National Iranian Oil Company (NIOC) to undertake a study to examine the possibility of sourcing gas from Iran's offshore South Pars fields and then piping it to an LNG plant in Assaluyeh in the Persian Gulf.

Anil Ambani, vice chairman and managing director, Reliance Industries said, "We are reviewing the South Pars venture in Iran." Speaking at a press conference here last week, Ambani indicated that Reliance already has substantial upstream activity, with its recent gas discovery and the 32 oil blocks it now has in India.

The 8 million tonne per annum project was being targeted for export of gas to India and other Asian and European markets. The Iranian South Pars field is the northern extension of Qatar's giant North Field and accounts for 10 per cent of the world's and 60 per cent of Iran's total gas reserves. Iran's portion of the field contains an estimated 436 trillion cubic feet of gas.

With a 25 per cent share in the LNG project, RIL was expected to take a lead for conducting the market study for the LNG project. BP, with a 25 per cent interest, was expected to provide technical expertise while the NIOC with a 40 per cent stake would supply gas. Interestingly, NIOC is scouting for a fourth partner to place the remaining 10 per cent equity.

However, with its gas discovery at home in 2002, Reliance is now reviewing its plans for Iran's South Pars project. Reliance has 'gas in place' estimated at 14 trillion cubic feet in the Krishna Godavari basin, which is capable of producing 60 million metric standard cubic metres (mmscmd) of gas per day.

Ambani said, "we have explored only 20 per cent of the block and there is a future potential to significantly increase the gas in place in KG -D6 blocks as about 80 per cent of the block is still to be explored".