The Oil Ministry is seeking Cabinet nod to allow Reliance Industries to retain three gas discoveries worth USD 1.45 billion in the eastern offshore KG-D6 block even after expiry of timelines.
RIL has not been able to submit a development plan for D-29, 30 and 31 gas discoveries, which hold an estimated 345 billion cubic feet of reserves, with the prescribed timelines due to dispute with the upstream regulator DGH over tests required to confirm them. The Oil Ministry feels that taking away the discoveries and rebidding the finds may lead to delay in development, sources privy to the case 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 moving the Cabinet Committee on Economic Affairs (CCEA) for relaxation in the Production Sharing Contract (PSC) timelines to help RIL monetise the finds.
Comments on a draft CCEA note are being sought from the ministries of finance and law besides the planning commission before taking it to the 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.
ALSO READ: Oil ministry asks GAIL, CPCL to stop payment to Reliance
In what could be another major blow for Reliance Industries (RIL), oil ministry has directed the company's customers GAIL India and Chennai Petroleum Corp (CPCL) to deposit their next payment for purchase of crude oil and natural gas from the KG D6 basin to the government accounts instead of remitting it to the company in an attempt to recover the government's profit share due from the Mumbai-based company. "GAIL and CPCL have been directed to remit the sale proceed of crude oil/condensate/natural gas from KG-D6 block which falls due immediately in to the government account so as to recover an amount of $115,263,612 at the rate of 50% by each company and deposit the same with government," oil minister Dharmendra Pradhan told the Lok Sabha, in a written reply. Read more
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