Reliance Industries has trashed a report of DGH-appointed one-man expert on reasons for fall in output at its KG-D6 fields saying the study of such a complex reservoir was prepared and issued in just one week.
The 11-page report by reservoir expert P. Gopalkrishnan is being used by the Oil Ministry to imply that RIL suppressed gas output at KG-D6 and so should not be given higher gas prices till it makes up for the shortfall in production of last three years.
“The report on such a complex reservoir was prepared and issued in a week of study by single individual,” RIL and its partner BP plc said in a presentation to Oil Minister M. Veerappa Moily and his ministry top brass.
“The report was based on field performance data of up to March 2011 only and was issued without conducting any field visit or any interaction with the contractor,” RIL said in the presentation.
Mr. Gopalkrishnan — hired by director general of hydrocarbons (DGH) — in a 2011 report said the fall in production in KG-D6 basin was not due to geological difficulties as claimed by RIL.
He said the field started and produced as per the expectations for a year or so, but the operator did not drill the wells as per the field development plan by the end of the first year, thereby affecting a rate decline.
RIL said the chosen expert was the author of a 2008 report prior to beginning of production that put the potential of KG-D6 fields at 80 million standard cubic meters per day.
And so, “had a clear conflict to conduct any study.”
In a point-by-point rebuttal the new report, RIL said the pressure decline at wells was nearly 4 times more than envisaged.
“Expert’s views on which DGH has been so heavily reliant are not only outdated but is also far removed from field realities,” it said.
RIL said was being punished twice over — first by levy of a USD 1.8 billion penalty and then by being denied a gas price revision, for a single crime of not producing in line with projections that were not even contractual commitments.
In the presentation, RIL-BP explained issues around its main D1&D3 fields in its eastern offshore KG-D6 block where output has fallen to less than a one-sixth to 10 mmscmd instead of rising to projected 80 mmscmd.
Mr. Moily’s ministry sees production fall due to RIL not drilling committed number of wells and held it in breach of contract. It levied USD 1.8 billion in penalty by way of disallowing cost incurred in past three fiscal.
And now, it plans to deny RIL the benefit of new price after the current USD 4.2 expires in April next year until it makes up for the shortfall of 1.9 trillion cubic feet during last three years.