Petroleum Ministry to move Cabinet to allow RIL to retain gas finds

April 15, 2014 03:55 pm | Updated May 23, 2016 04:55 pm IST - New Delhi

The Petroleum Ministry is moving the Cabinet to allow Reliance Industries retain three gas discoveries worth USD 1.45 billion in the eastern offshore KG-D6 block even after expiry of timelines.

Upstream regulator Directorate General of Hydrocarbon (DGH) had sought taking away the three finds from RIL as the company had failed to prove their commerciality by not conducting prescribed tests.

The Petroleum Ministry is, however, seeking relaxation of the rules for RIL as it feels rebidding the finds may lead to delay in development of the discoveries, which hold 345 billion cubic feet of recoverable gas reserves, sources privy to the development said.

Also, it feels RIL may go to arbitration which may lead to further delay in production and extra cost associated with the arbitration.

The three finds, which can be quickly put on production by RIL using existing infrastructure of currently producing gas fields as well as those being developed, are worth USD 1.45 billion at current gas price of USD 4.2 per million British thermal unit.

Sources said the ministry is likely to seek approval of the Election Commission before floating a draft note for inter-ministerial consultations.

After comments are received from the finance and law ministries besides the planning commission, it will be put to the Cabinet Committee on Economic Affairs (CCEA) for approval.

Sources said RIL will have to conduct DGH prescribed Drill—Stem Test (DST) on D29, 30 and 31 discoveries and only half of the USD 93 million will be allowed to be cost recovered.

If the CCEA approves, the same rule will then be applied to RIL’s four gas discoveries (D—9, 10, 32 and 40) in North—East Coast block NEC—0sn—97/1 (NEC—25) which hold recoverable reserves of 1.032 Trillion cubic feet.

Out of a total area of 7,645 square kilometres in KG—D6 block in Bay of Bengal, the government last year allowed RIL and its partners BP plc of UK and Canada’s Niko Resources to retain only 1,4462.12 sq km area where regulator DGH-recognised discoveries have been made.

The area snatched away from RIL was more than 5,367 sq km that the company had offered to relinquish voluntarily and contained five discoveries — D4, D7, D8, D16 and D23 for which the DGH had opined that RIL missed deadlines for submission of investment plans.

The five discoveries together had 0.805 Tcf 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.

Sources said the 1,4462.12 sq km area that RIL was allowed to retain included the currently producing D1&D3 gas fields and D26 (MA) oil and gas field.

Besides, a cluster of four satellite fields (D2, D6, D19 and D22) and two other significant discoveries (D42 and D34), for which investment plans have already been approved, are also being allowed to be retained by RIL.

The area allowed to be retained also includes three yet—to—be—confirmed discoveries of D29, D30 and D31.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.