| "RIL's cost of $9.08 billion is only indicative. The actual cost over the life of the field could be higher or lower than the indicative costs," said a senior official in the Directorate General of Hydrocarbons (DGH). |
| The official explained that the contractor would take the worst-case scenario into account "to be on the safe side", when working out the field development plan and the probable cost of exploration and development of the block. |
| Approval from the DGH simply means that "even at a capex of $9.08 billion, the D6 block remains commercially viable.'' |
| RIL's probable cost in the D6 block has already gone up three times over to $9.08 billion after the production target was doubled to 80 million cubic metres a day (mcmd). The cost was earlier estimated at $2.4 billion for the production of 40 mcmd. |
| The hike in cost has been criticised by various quarters, as it is said that the government's share of the revenues would kick in from a later date, after RIL recovered its (higher) expenditure on the block. |
| The DGH official said that the cost could ''go up to even $12 billion if rig and services costs escalated". These costs are approved by a management committee on a yearly basis. |
| The management committee comprises of four members, one each from the two partners RIL and Niko, a representative of the DGH and an official of the petroleum ministry. |
| "It's not possible to approve the cost for a 15-year period, considering that we don't even know what the cost of rigs, for example, will be in the next couple of years," the official said. |
| The DGH official, however, denied allegations that RIL's cost estimates were padded up as the cost of rigs, pipes and manpower had increased 4-5 times over the past five years. |
| The official informed that RIL's underwater pipeline frame to evacuate the gas which was being constructed, would be able to handle 120 mcmd, while the project envisaged production of 80 mcmd. |
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