New Delhi: India’s oil ministry is approaching the cabinet to deny Reliance Industries Ltd a higher price for gas produced from its main offshore fields in the KG-D6 block until the dispute over the reasons for output not matching targets is resolved.
The ministry wants the current rate of $4.2 per million British thermal unit to continue to apply for gas produced from Dhirubhai-1 (D1) and D3 fields even after expiry of the current term on 31 March.
The government had in late June approved pricing of all locally produced natural gas at an average of international hub rates and actual cost of liquified natural gas (LNG) into India from the next fiscal year. The new rate, according to this formula, would be around $8.4 per mmBtu. The new rates were to apply uniformly to gas from Reliance’s fields as well as those of state-owned Oil and Natural Gas Corp. Ltd.
Now the ministry wants the old rates to continue for D1 and D3 fields but the new price would apply to all other fields in the KG-D6 block, including the currently producing MA oil and gas fields.
“There is some technical dispute about the quantum of gas available in some discoveries in KG-D6 block and that is a technical dispute between RIL and Directorate General of Hydrocarbons (DGH). That matter needs to be resolved before we take a final decision applicability of new formula,” oil secretary Vivek Rae told reporters.
The hydrocarbons regulator believes output from D1 and D3 fell to 10.12 million standard cubic metres per day from 53-54 mscmd achieved in March 2010 because Reliance did not drill its committed number of wells. More wells, it believes, would increase output. The firm, on the other hand, blames unforeseen geological complexities for the fall in output.