New Delhi: India’s Directorate General of Hydrocarbons wants Reliance Industries Ltd (RIL) to give up 86% of its D6 gas block area in the Krishna-Godavari (KG) basin, including eight discoveries worth at least $5 billion, saying the firm has overshot the time allotted to it for developing the area.
Rejecting RIL’s offer to relinquish 4,233 sq. km of “low prospectivity area” in the eastern offshore KG-DWN-98/3 or KG-D6 block, DGH said the firm should contractually give up 6,601 sq. km out of the total 7,645 sq. km total area in the block.
In a six-page note excluding three annexures, director general of hydrocarbons R.N. Choubey on April 15 wrote to oil secretary Vivek Rae that of the 19 oil and gas discoveries claimed by RIL, three finds have not been established as commercially viable in absence of test data and the company has not submitted any investment plans for another five.
“The ministry of petroleum and natural gas may intimate the contractor (RIL) about cessation of petroleum exploration license in respect of 6,601 sq. km of contract area in the first instance in the block KG-DWN-98/3 under Article 3.11 of the PSC (production-sharing contract ),” he wrote. He said the area proposed for cessation has at least 1.15 trillion cu. ft of known recoverable gas reserves valued at $4.83 billion at current prices.
Of the 19 finds, RIL began crude oil production from the MA field in September 2008. It started gas output from MA field and Dhirubhai-1 & 3, the largest of the 18 gas discoveries in the block, in April 2009. “Of the rest, declaration of commerciality (DoC), the first step towards monetization, for D29, 30, 31 and 42 has not been approved by DGH “because of lack of sustainable production test data which a production sharing contract requirement,” DGH wrote.