Deora asks for second opinion on RIL’s $8.8-bn investment

Deora asks for second opinion on RIL’s $8.8-bn investment
PTI
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First Published: Sun, Aug 26 2007. 02 58 PM IST
Updated: Sun, Aug 26 2007. 02 58 PM IST
New Delhi: Petroleum Minister Murli Deora has asked for an independent review of Reliance Industries’ proposed investment of $8.8 billion (Rs3, 62,383 crore) in developing its KG-D6 fields to allay fears that the company was inflating expenditure to get a higher price of natural gas.
Eminent reservoir engineer P Gopalakrishnan has been engaged to look into the reasons for rise in Phase-I capital expenditure from $2.47 billion to $5.2 billion and an additional $3.6 billion proposed for Phase-II beginning 2010 for maintaining plateau production of 80 million standard cubic meters per day.
Besides, one of the six shortlisted global consultants will be appointed to carry out validation of the proposed field development plan, upstream oil regulator VK Sibal wrote to the ministry on 24 August on Deora’s instructions for a second opinion.
The six consultants include Mustang Engineering of US, Pajak Engineering of Canada, Petrofac of UK and Beicip Franlab of France.
Sibal said the $8.8 billion investment approval was limited only to establish techno-economic feasibility of producing gas from Dhirubhai-1 and 3 fields in KG-D6. RIL will, however, be reimbursed cost from gas sales based on actual independently audited expenditure and not on approved Field Development Plan.
As per the Production Sharing Contract, all capital commitments are made on the basis of a tendering process through international competitive bidding (ICB) mechanism and detailed procurement procedures are laid out in the PSC based on the concept of optimal pricing.
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First Published: Sun, Aug 26 2007. 02 58 PM IST