New Delhi: Reliance Industries and its British partner BP Plc have warned that eastern offshore KG-D6 gas fields will stop producing in 2015 unless the government approves investments needed to keep the nation’s largest gas fields alive.
RIL executive director PMS Prasad and BP India head Sashi Mukundan met oil minister S Jaipal Reddy for nearly three and half hours on Friday to highlight the exigency facing the flagging KG-D6 fields due to his ministry not approving annual budgets and capital spending for three years, sources said.
RIL-BP at the meeting, which was also attended by oil secretary GC Chaturvedi, joint secretary (exploration) Giridhar Aramane and Directorate General of Hydrocarbon (DGH) director general Rajiv Nayan Choubey, said output at KG-D6 will continue to fall in absence of interventions.
KG-D6 output this week has dropped to below 30 million standard cubic metres per day (mmscmd) and is projected to further fall to 20 mmscmd by next year. Gas output dip, from 61.5 mmscmd achieved in March 2010, has pulled down power generation and industrial production.
Sources said while the oil ministry-controlled block oversight committee is supposed to approve spending before beginning of a fiscal, in case of KG-D6, budgets and work programmes for 2010-11, 2011-12 and 2012-13 have not been approved. Besides budgets, the Management Committee (MC), which is headed by DGH and includes a senior official of the oil ministry, has not approved revised field development plan for MA oilfield in the same Krishna Godavari basin KG-DWN-98/3 or KG-D6 block in Bay of Bengal. Also, the MC has refused to recognise at least three gas discoveries in the block, impeding preparation of a field development plan to bring them to production.
While MC is supposed to meet at least once a quarter, RIL-BP’s request for convening meeting of the panel has not even been acknowledged on past 6-7 occasions.
Sources said RIL-BP told Reddy that well interventions at the currently producing Dhirubhai-1 & 3 fields and MA oilfield can potentially add 0.8 trillion cubic feet if a capital expenditure of $543 million for 2012-13 is approved. Listing six interventions they had planned in the KG-D6 to arrest output decline, RIL-BP said these were “critical to the maintenance of production at the current levels” but have so far not been approved by the block Management Committee.
RIL-BP, Prasad and Mukundan said, had been conducting petroleum operations and incurring contract costs without an approved work programme and budget since 1 April, 2011. Neither Reddy nor his team however gave any commitments on requests made by RIL-BP.