Reliance Industries Limited EBITDA falls 2% as KG-D6 output declines

Reliance Industries Limited reported oil and gas earnings before interest, tax, depreciation and amortisation (EBITDA) of Rs 4,901 crore in the second quarter of fiscal year 2027 (Q2 FY27), down 2% from a year earlier. KG-D6 production declined 9% to 57.8 billion cubic feet equivalent (BCFe), while higher coal-bed methane (CBM) volumes and improved oil and condensate pricing partly offset the volume fall.

Why did Reliance’s oil and gas EBITDA decline in Q2 FY27?

Reliance’s oil and gas EBITDA declined because lower KG-D6 production outweighed support from CBM gas, oil and condensate realizations, and a favourable exchange-rate movement. EBITDA was Rs 4,901 crore in Q2 FY27, compared with Rs 5,002 crore in Q2 FY26, while revenue declined by Rs 38 crore to Rs 6,020 crore. The presentation described earnings as moderating with lower volumes, partly offset by higher realizations in liquids and CBM.

Reliance’s Q2 FY27 EBITDA was also Rs 72 crore below Rs 4,973 crore in Q1 FY27, although its EBITDA margin rose sequentially by 240 basis points from 79.0% to 81.4%. Compared with Q2 FY26, the margin declined by 120 basis points from 82.6%. Reliance attributed the year-on-year margin movement to higher Government of India levies, even as the absolute EBITDA decline was limited to 2%.

How much did Reliance’s KG-D6 production fall?

Reliance’s KG-D6 production fell 9.0% year on year to 57.8 BCFe in Q2 FY27 from 63.5 BCFe in Q2 FY26. Production was also below the 59.2 BCFe recorded in Q1 FY27, a sequential decline of 1.4 BCFe. The comparison shows that the lower production level extended beyond the year-on-year base effect and continued into the latest quarter.

Average KG-D6 gas production was 24.0 million metric standard cubic metres per day (MMSCMD) in Q2 FY27, versus 26.1 MMSCMD in Q2 FY26 and 24.8 MMSCMD in Q1 FY27. That represented a 2.1 MMSCMD decline from a year earlier and a 0.8 MMSCMD sequential decline. Reliance identified the lower KG-D6 volume as the main factor behind moderated oil and gas earnings during the quarter.

What offset lower KG-D6 volumes for Reliance?

Higher CBM production and realization partly offset lower KG-D6 volumes for Reliance. CBM output increased 21.4% year on year to 3.4 BCFe in Q2 FY27 from 2.8 BCFe, and exceeded the 3.1 BCFe produced in Q1 FY27. CBM realization rose to $13.24 per million British thermal units (MMBtu), from $9.53 per MMBtu in Q2 FY26 and $12.00 per MMBtu in Q1 FY27.

Oil and condensate realization provided another offset, increasing 38.9% year on year to $98.90 per barrel in Q2 FY27 from $71.20 per barrel. The Q2 figure was below the $107.40 per barrel recorded in Q1 FY27, while average oil and condensate output was 15,903 barrels a day. Reliance also reported average CBM production of 1.04 MMSCMD and cited favourable exchange-rate movement among the supports to EBITDA.

Reliance’s second phase of a 40-well CBM multi-lateral campaign was ongoing in Q2 FY27, with 37 wells completed and 35 wells put into production. The disclosed figures indicate that two completed wells were not yet producing at the reporting date, while three wells in the 40-well programme had not been completed. Reliance did not disclose individual well output, campaign costs or a date for completing the second phase.

How did global LNG disruption affect the gas market?

The Middle East conflict structurally tightened the global liquefied natural gas (LNG) market, according to Reliance, with spot LNG prices rising from about $16 per MMBtu to about $29 per MMBtu during Q2 FY27. About 32 million metric tonnes of LNG supply had been disrupted through August 2026. Increased production from the United States, Canada, Nigeria and Russia added 25 million metric tonnes, while demand management and inventory drawdowns across Asia and the European Union also addressed part of the shortfall.

European Union gas storage stood at 72.2%, about 15.5 percentage points below its five-year average of 87.7%. Q2 FY27 average prices were $22.83 per MMBtu for Japan Korea Marker, $21.01 per MMBtu for National Balancing Point, $21.46 per MMBtu for Title Transfer Facility and $2.89 per MMBtu for Henry Hub. Reliance said short-term LNG prices were expected to remain elevated and volatile, with flows through the Strait of Hormuz and European winter severity identified as key variables.

What changed in India’s gas market in Q2 FY27?

India’s gas consumption remained broadly flat year on year in Q2 FY27 because 23% growth in city gas distribution offset lower consumption in other sectors. Fertiliser demand remained stable as alternate sources replaced supplies affected by the Strait of Hormuz disruption. The pattern contrasted with LNG imports, which averaged 2.3 million metric tonnes a month in Q2 FY27, about 15% higher year on year.

India diversified LNG supply toward the United States, Oman and Nigeria to offset lost volumes from Qatar and the United Arab Emirates. For the second half of FY27, the KG-D6 domestic gas ceiling price was revised to $9.89 per MMBtu. In the first half of FY27, average delivered-ex-ship West India LNG was $19.85 per MMBtu, compared with a domestic ceiling price of $8.90 per MMBtu, a difference of $10.95 per MMBtu.

The domestic price comparison changed materially from the first half of FY26, when average delivered-ex-ship West India LNG was $12.20 per MMBtu and the domestic ceiling was $10.04 per MMBtu. By H1 FY27, the imported LNG benchmark had risen by $7.65 per MMBtu while the domestic ceiling had declined by $1.14 per MMBtu. Reliance said India’s gas demand remained resilient despite global supply disruptions and elevated LNG prices.

Conclusion

Reliance’s Q2 FY27 oil and gas result remained near flat in absolute terms but declined across the main reported comparisons. EBITDA fell by Rs 101 crore from Q2 FY26 and by Rs 72 crore from Q1 FY27 as KG-D6 output declined to 57.8 BCFe. Higher CBM production, a 38.9% year-on-year increase in oil and condensate realization, and favourable exchange-rate movement reduced but did not eliminate the effect of lower KG-D6 volumes.

The next disclosed operating milestone is the second phase of Reliance’s 40-well CBM campaign, where 35 wells were in production at the Q2 FY27 reporting date. The revised $9.89 per MMBtu KG-D6 ceiling price for H2 FY27 will also remain relevant, alongside LNG market conditions that management linked to Strait of Hormuz flows and the possibility of a colder-than-expected European winter.