Oil ministry pushes for RIL to retain gas fields

Even in the last leg of the current tenure of the UPA government, the ministry headed by him is all set to allow RIL to retain three prized gas fields in the KG basin, which regulator Directorate General of Hydrocarbons had asked the firm to relinquish as it could not prove its commerciality in these fields.

 

The oil ministry plans to move Cabinet to allow Reliance Industries to retain three gas discoveries in the eastern offshore KG-D6 block even after expiry of timelines.

This is because the ministry feels that rebidding may lead to delay in discoveries which hold 345 billion cubic feet of recoverable gas reserves.

 

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

After comments are received from the finance and law ministries and the Planning Commission, it will be forwarded to the Cabinet Committee on Economic Affairs for approval.

 

Moily had late last year virtually overruled the DGH and allowed the firm control of the D29, D30 and D31 fields which together hold around 2.2 trillion cubic feet (tcf) of gas.

 

DGH had earlier asked RIL to relinquish these three fields for failing to perform the drill stem test (DST) which it says is mandatory during exploration.

 

In an order, subject to review by Cabinet Committee on Economic Affairs, Moily stressed that there have been instances in the past of the regulator not insisting on DST for declaration of commerciality. 

 

Sources said RIL will have to conduct DST on D29, 30 and 31 discoveries and only half the $93 million will be allowed to be cost recovered.

 

f 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 sq km in KG-D6 block in the Bay of Bengal, the government last year allowed RIL and its partners BP Plc of UK and Canada's Niko Resources to retain only a 14,462.12 sq km area where DGH recognised that discoveries have been made.