No need to appoint another body of experts, says KG-D6 panel
Warning that engaging another body of experts to verify the decline in gas production from the RIL-owned KG-D6 fields would “compromise” the arbitration process of disallowance of cost recovery, the Management Committee (MC) for the D1 and D3 discoveries has asserted that the Production Sharing Contract (PSC) has no provision for any such appointment by the government.
Rejecting the demand for appointing independent experts, the government nominees in the MC said the Directorate General of Hydrocarbons (DGH) had already engaged a reputed consultant for this purpose. His report has been examined in the DGH and no need was perceived to differ from his findings based on the data and analysis available so far.
Interestingly, despite the MC’s views, in its meeting on October 1, the Petroleum and Natural Gas Minister, Veerappa Moily, on October 4 went on to state: “There are world-renowned experts who definitely can go into these things and can come out with the truth. We don’t want to prevent any truth from coming out.’’ The MC meeting for approval of remainder of revised field development plan (RFDP) of D1 & D3 gas fields of KG D6 was held on October 1. It comprises the Director-General of Hydrocarbons (DGH), Joint Secretary (Exploration), a nominee of RIL, its partners NIKO and BP.
“On the request of the contractor [RIL], the government has already agreed to arbitration under Section 33 of the PSC on the question of disallowance of cost-recovery to the tune of $1.5 billion due to decline in production, downgrading of reserves and attendant issues. Hence appointment of another body is redundant and will compromise the arbitration process,” according to the MC meeting resolution copies of which are with The Hindu.
Referring to agenda 7.3 on the list about the differences in the views of the MC members on in-place-gas volumes and ultimate recoverable reserves from the D1 and D3 gasfields and that the MC could consider appointing a reputed, independent international firm to review and submit its report, the government nominees — the DGH and the Joint Secretary (Exploration) — said: “Unlike the provision for appointment of auditor, there is no need as per the PSC for the MC to approve the appointment of an international consultant to be hired by the contractor [RIL] for re-assessment/validation of gas in place (GIP) and ultimate recoverable reserves. If the contractor feels the need to appoint a consultant, it is for him to take the call as per the provision of the PSC.” The government/DGH nominees did not agree with the proposal for revision of in-place gas volumes and ultimate recoverable reserves from the D1 & D3 gasfields is concerned, based on data, its interpretation and analysis so far.
Referring to R. Gopalkrishnan’s report, the government nominees said it had been made available to RIL for compliance and taking remedial measures but nothing was done at the contractors’s end to fulfil the obligations outlined in it. “Thus, the report of the consultant also supports the views of the DGH enumerated earlier. Under the circumstances, the contractor has so far failed to comply with requirements of Article 10.13 and Article 10.9 of the PSC.”
“I have time and again stated that there have been repeated attempts by the Petroleum Minister not only to weaken the government’s case in the arbitration… but also to bail out RIL and its partners NIKO and BP by overlooking all legal and administrative objections. He has been overruling his officers and seeking to remove those who do not toe his line to give undue benefit to RIL. I have sought the intervention of Prime Minister Manmohan Singh, but as usual he has remained a silent spectator to the loot and plunder of natural resources by the capitalist powers,” CPI MP Gurudas Dasgupta said.
Keywords: RIL, Mukesh Ambani, BP, Reliance, KG-D6, gas exploration, DGH, natural gas policy, gas production output, output decline, arbitration process, cost recovery, Directorate General of Hydrocarbons