NAVI MUMBAI, April 7: India's Reliance Industries Ltd will finalise sales agreements in the next few months for natural gas from its deep sea fields off the country's east coast, a senior official said on Saturday.

We are in the process of price discovery right now and hope to sign agreements in the next 2-3 months, said P.M.S. Prasad, head of Reliance's oil and gas business.

Reliance, India's top private oil refiner and petrochemical maker, is developing two deep-sea gas fields in India's Krishna Godavari basin, off the southern state of Andhra Pradesh, and aims to produce 80 million cubic meters of gas a day (mmscmd) by mid 2008.

Prasad said the company would initially produce 40 to 50 mmscmd, using up to 15 mmscmd of this for its own plants, at its refinery in the western state of Gujarat.

Reliance, through an associate firm, is constructing about 10,000 km (6,200 miles) of pipeline infrastructure to transport its gas from its fields to the western and southern regions.

About 250-300 billion rupees ($6-7 billion) is required from Reliance to set up these pipelines, of which we have already invested 170 billion rupees in the east-west pipeline, Prasad said at a press conference.

He said the company was in talks with several fertiliser and power firms to sell its gas.

I can't tell you their profile, but the government wants us to fill the existing shortfall and supply gas to fertilizers and power and then to other heavy industries, he said.

India produces 95 mmscmd of gas, and the government expects this to rise to more than 190 mmscmd by 2009 after a series of gas finds off the east coast, including Reliance's discoveries, come on stream.

India, Asia's third-largest oil consumer, is encouraging use of natural gas to control its oil import bill and rein in rising inflation, but inadequate infrastructure to support gas demand is a seen as a major road block.

Reliance is also planning to supply gas through distribution projects in cities across five Indian states -- Tamil Nadu and Karnataka in the south, Maharashtra and Gujarat in the west and West Bengal in the east.

Reliance has 83 percent of its exploration acreage in deepwater areas and is planning to spend $5.2 billion on developing the two fields. The company has signed development contracts worth $4.5 billion.

Prasad said escalating hiring costs of deepwater drilling rigs and other services had affected the company's future exploration plans.

When asked if Reliance would diversify into rig-building to address its problems arising out the shortage, Prasad said the option was being evaluated but no decision had yet been made.

—Reuters