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Reliance Said to Halt Oil Output as Storm Strengthens

May 19 (Bloomberg) -- Reliance Industries Ltd., the operator of India’s biggest natural gas field, stopped crude oil output in the Bay of Bengal as tropical cyclone Laila strengthened, said a person with direct knowledge of the matter.

The explorer closed wells producing about 30,000 barrels a day of oil in the KG-D6 field starting last night for 24 to 48 hours, the person said, asking not to be identified because he isn’t authorized to speak to the media. Gas output at the offshore field wasn’t halted, he said. Manoj Warrier, a spokesman for Reliance, declined to comment.

Laila, which intensified into a severe cyclonic storm over the Bay of Bengal and approached India’s east coast, is likely to make landfall in Andhra Pradesh, a major rice-growing area, by tomorrow morning. The cyclone, with sustained winds of at least 105 kilometers (65 miles) per hour, was about 150 kilometers east-northeast of Chennai at 11:30 a.m. local time, the India Meteorological Department said in a statement on its website.

Gas output was unaffected because the pipes carrying the fuel to the shore are under the sea bed, the person said. Drilling in all areas off the east coast has been stopped and rigs have been moved to safe zones, Reliance said in an e-mailed statement. Operations on the floating production storage and offloading vessel in KG-D6 were also suspended, Reliance said, without elaborating.

Reliance shares declined 2.2 percent to 998.65 rupees in Mumbai trading, the lowest level since March 9, compared with a 2.8 percent fall in the benchmark Sensitive Index of the Bombay Stock Exchange.

Field Production

The KG-D6 field currently produces about 64 million cubic meters of gas a day, according to P.M.S. Prasad, executive director at Reliance Industries. Peak output of 80 million cubic meters a day is expected to be reached this year, doubling domestic availability of the fuel.

The field’s oil output is equivalent to about 4.5 percent of the country’s production.

The cyclone is moving in a northwesterly to northerly direction and its winds are forecast to strengthen to 125 kph by late tonight, with gusts to as high as 140 kph, India’s weather office said. The storm is expected to make landfall between Nellore and Kakinada, according to the met department statement. Reliance has a gas-processing terminal at Kakinada.

Coal Ship

Gangavaram port in Andhra Pradesh state stopped operations because of the cyclone. One ship carrying coal is waiting to unload the cargo, Anil Panjwani, head of marine operations at the port, said in a telephone interview today.

“The government has decided to move a few thousand people from low-lying areas of the state to higher ground,” T. Radha, Commissioner for Disaster Management, Andhra Pradesh, said by telephone today. “We will be providing them with drinking water, food and medicines in these shelters.”

The storm may stall the progress of the monsoon, D. Sivananda Pai, a director at the Indian weather office, said in a phone interview yesterday. India’s farmers rely on the monsoon, which accounts for four-fifths of the nation’s annual rainfall, to water their crops as about 60 percent of arable land isn’t irrigated.

Coastal Refineries

Agriculture is the main occupation of about 62 percent of the people in Andhra Pradesh, according to the Indian government’s official website, with rice accounting for about 77 percent of the state’s total production.

The Bay of Bengal is also the site of Cairn India Ltd.’s offshore operations. Refiners such as Hindustan Petroleum Corp. have plants on the coast, including in Visakhapatnam, northeast of Vijayawada.

Four vessels in the region, including the Pratibha Indrayani, have been anchored to wait out the storm, S.B. Sawant, general manager of commercial operations at Mumbai-based Pratibha Shipping Co., said by telephone. The company transports oil products for refiners including Indian Oil Corp., Reliance Industries and Essar Oil Ltd. as well as trading companies Vitol Group and Glencore International AG, according to its website.

Rain Forecast

Heavy rain is likely in Tamil Nadu and Andhra Pradesh states during the next 24 to 36 hours and may damage power and communication lines in some areas, according to the weather office’s statement. The sea will be “high to phenomenal” along the coasts of the two states, according to the statement. The storm may move toward Orissa and West Bengal states from tomorrow.

The weather office predicts wind speeds will reach 155 kph tomorrow evening and slow to 95 kph a day later.

India is regularly buffeted by cyclones that form in the Bay of Bengal between April and November, bringing destruction and flooding to coastal communities. Tropical Cyclone Aila left 169 people dead and affected more than 7.7 million people in India and Bangladesh last May.

To contact the reporter on this story: Rakteem Katakey in New Delhi at rkatakey@bloomberg.net.

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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