Govt. mulls action against RIL for fall in KG-D6 output

With the production from the once prolific Krishna Godavari basin D6 block of Reliance Industries Limited (RIL) projected to decline to 27 million standard cubic metres per day (mscmd) by April this year, the Government is exploring all legal options to take “penal action” against RIL for the ‘drastic fall' in production.

Under the Field Development Plan (FDP) submitted by it, the company was to produce around 70 mscmd of gas from the D6 block but the present levels of output stand at around 35 mscmd only. “RIL has informed that during 2012-13, production will fall to 27 mscmd and this could go down to 22.66 mscmd in 2013-14. The Ministry is upset over the sudden fall in gas production and suspects a design in the dramatic fall, especially after U.K.-based BP plc bought a 30 per cent stake in RIL last year,” a senior official said.

Highly placed sources in the Petroleum Ministry said that the Government was consulting legal experts, including the Directorate General of Hydrocarbons, to draw up a plan for taking action against RIL in the case of KG D6 block. The matter has been sent to the Law Ministry for opinion and as soon as it received, the Government would go ahead with issuing notice to RIL. “We are contemplating action against RIL as from 70 mscmd this year, production has gone down to almost 37 mscmd,” Petroleum Minister Jaipal Reddy said.

Officials said RIL had already informed the Petroleum Ministry about the further fall in production and till this Sunday, production was around 35.5 mscmd.

Nod for D-34 block

Reliance Industries Limited (RIL) and its partner BP plc have got the government nod for putting in place a plan to develop another of their discovery in KG-D6 block but did not get approval for the D-29, D-30 and D-31 discoveries.

A committee headed by Directorate General of Hydrocarbons (DGH) recently gave its approval to the commercial probability of Dhirubhai-34 or D-34 gas find in the KG-DWN-98/3. The Management Committee (MC), which besides DGH also includes representative of Petroleum Ministry, however, did not approve commercial probability of D-29, D-30 and D-31 discoveries in the absence of individual well tests of the finds.

RIL had taken to MC R-series cluster comprising of the four finds — D-29, 30, 31 & 34. But the MC approved only D-34. The DGH trimmed down in place reserves at D-34 to 1.645 trillion cubic feet (tcf) from 2.207 tcf estimated by RIL-BP. The MC approved drilling of 11 wells to produce 14.68 mscmd of gas for 8 years beginning 2016-17. The capital expenditure for developing D-34 was estimated at $2.338 billion. But for D-29, 30 and 31, the MC rejected the the approval on the grounds that individual well tests confirming the discovery nor appraisal wells had been drilled to substantiate the finds.

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