Mumbai: Hardy Oil and Gas Plc. of UK, the 10% partner of Reliance Industries Ltd (RIL) in its D3 hydrocarbon block in the Krishna-Godavari (KG) basin, has said that the joint venture is currently reviewing the plans for the block based on current government policies and prospectivity of the block.

“In light of the government of India’s new gas pricing and other policies, as well as the Ministry of Defence access restrictions, the D3 joint venture is reviewing its plans for the block," said Hardy Oil in its interim management statement released on Thursday.

D3 is an un-operational hydrocarbon block bagged by RIL under the fifth round of New Exploration Licensing Policy. It has so far not been able to achieve its minimum works programme (MWP) commitment given to the government at the time of bagging the block. UK energy explorer BP Plc. is a 30% partner in the venture.

The exploration had been marred by hurdles as the company has so far failed to get an extension to drill beyond December 2014. It had sought an extension till August 2015.

Last year, the defence ministry, too, had raised objections against drilling in almost 30% of the block area as that fell under the purview of Defence Research and Development Organization (DRDO), a high-security research wing of the ministry.

Hardy Oil said it feels the new gas-pricing guidelines issued by the government this month do not ensure long-term viability.

“The new Government of India pricing policy implies a significantly lower price than the previously notified Rangarajan Committee formula. There remains some uncertainty surrounding a pricing premium for deep-water discoveries and the development of our D3 discoveries is dependent on the future long-term price outlook for gas sales. The JV is currently reviewing the appropriate way forward, taking into account policies recently announced by the GOI and the overall prospectivity of the block," the statement said.

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