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| Edited By: Neeraj Thakur |Source: DNA |Updated: Mar 18, 2018, 06:34 AM IST
The Ministry of Petroleum and Natural Gas on Tuesday said it will not accept the argument of Reliance Industries (RIL) that the recoverable reserves of natural gas in the Krishna-Godavari Basin are less than earlier estimates.
This will add spark to the ongoing arbitration between the private sector operator and the government at a time when the production has fallen to as low as 25 mmscmd.
“RIL has said that the recoverable reserves in the KG basin are less, but we do not agree with it and would want it to be audited by the third party. The issue is there in arbitration and the arbitrators will take the appropriate step to resolve the issue,” said S Jaipal Reddy, Union minister for petroleum and natural gas.
Earlier this year, RIL had told the petroleum ministry that the natural gas reserves in its main production gas fields in the KG D6 basin were only 3.10 trillion cubic feet (TCF), almost 70% less than original estimates. The company had blamed “unforeseen geological surprises” in the field for the decline in production.
D1 & D3 are the biggest blocks in the KG basin and the company has produced 2 TCF of gas from the field since 2009. Production had touched 54 mmscmd in 2010 after which there is a constant decline.
The ministry and RIL are going through arbitration as the ministry wants to penalise the company for not achieving the production target of 80 mmscmd from the KG Basin by 2012.
The ministry has told RIL that the company will not be allowed to recover $1.005 billion out of the $5.756 billion investment it had made on developing Dhirubhai-1 and 3 (D1 & D3) gas fields in the Bay of Bengal deep sea block KG-DWN-98/3 (KG-D6).
The Mukesh Ambani-owned company has contested the government’s move saying the production sharing contract did not have any provision of penalty in case the company failed to achieve the production target.
RIL has appointed former chief justice of India S P Bharucha as its arbitrator while the oil ministry has appointed justice Khare as its arbitrator for the case.
