The Petroleum and Natural Gas Ministry has asked Reliance Industries Limited (RIL) to give up 81 per cent of its KG-D6 gas block, including five discoveries, as the timeframe for production from these assets had expired.
“I think the notice for relinquishment has gone. If it has not yet , it will go today. We plan to send them the notice today,” Petroleum Minister Veerappa Moily said here. The Ministry wants RIL and its partners to give up 6,198.88 sq km out of a total 7,645 sq Km area in KG-D6 block, by retaining only the portions where regulator DGH-recognised discoveries have been made.
The area being asked for is more than the 5,367 sq Km area that RIL had offered to relinquish. It also includes five discoveries—D4, D7, D8, D16 and D23—for which the Directorate General of Hydrocarbon (DGH) had opined that RIL missed deadlines for submission of investment plans. “We discussed the issue threadbare, and, after analysing it, have reached to this conclusion that they (RIL) need to relinquish certain area as per the Production Sharing Contract (PSC). We have followed a transparent process where we gave them due opportunity to present their case,” he told reporters here.
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The five discoveries hold 0.805 trillion cubic feet of reserves, or about one-fourth of the restated reserves in the currently producing Dhirubhai-1 and 3 (D1&D3) fields in KG-D6 block, and are worth $10 billion at current imported cost of gas.
Mr. Moily indicated that the Petroleum Ministry would soon be moving the Cabinet to deny the new gas price, to be effective from April 2014, from D1&D3 to RIL. This would be done on the grounds that fall in output to 10 million standard cubic metres per day from 54 mmscmd achieved in March 2010, instead of rising to projected 80 mmscmd, was due to RIL's failure to drill the requisite number of wells.
“I have acted in all fairness in deciding that the contractor should be asked to relinquish corresponding areas pertaining to 5 discoveries (814 sq Km) with immediate effect as RIL had not submitted the field development plan for these within the stipulated timeframe,” he said. He wanted this area to be to be offered for bidding on a priority basis.
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For the balance three finds, covering an area of 316 sq km, Mr. Moily agreed with RIL-BP that the DGH had not been insisting on drill stem test (DST) for confirmation of a discovery in the past and had decided to rake up the issue of absence of DST in case of D29, D30 and D31 finds after 8 months of commerciality documents being submitted and around 40 months from the discovery.