 "Surrender 81% of KG-D6: Moily to RIL")
"I think the notice (for relinquishment) has gone. If it hasn't yet gone, it will go today," Petroleum Minister Veerappa Moily said in Delhi.
The ministry wants RIL and its partners, BP Plc of UK and Canada's Niko Resources, to give up 6,198.8 sq km of a total 7,645 sq km area, retaining only the portions where discoveries recognised by the directorate general of hydrocarbons have been made.
The area sought is more than the 5,367 sq km RIL had offered to relinquish and includes five discoveries — D4, D7, D8, D16 and D23, for which DGH had opined that RIL missed deadlines for presenting investment plans.
"We discussed the issue threadbare and after analysing it, have reached the conclusion that they (RIL) need to relinquish certain areas under the production sharing contract," he said.
"We have followed a transparent process, where we gave them due opportunity to present their case."
The five discoveries hold 0.805 trillion cubic feet of reserves, or about one-fourth of the restated reserves in the currently producing Dhirubhai-1 and 3 (D1&D3) fields in KG-D6 block, and are worth $10 billion at the current imported cost of gas.
Also, the ministry would be moving the cabinet soon to deny the new $8.4 a million British thermal unit price for gas from D1&D3. This would be done on the grounds that fall in output to 10 million standard cubic metres per day (mscmd) from 54 mmscmd achieved in March 2010, instead of rising to projected 80 mscmd, was due to RIL's failure to drill the requisite number of wells.
"The gas pricing note to the Cabinet will go shortly," Moily said. RIL will be allowed the new price only if its arguments of geological complexities being responsible for the fall in production are proved. This is the second penalty sought to be imposed on RIL. The ministry has already moved to deny $1.8 billion of its cost for the same reasons.
The ministry has, however, not indicated how it will compensate RIL for the period when it is forced to sell gas at a $4.2 rate if it is proved at a later date that the company had not suppressed the output.
Officials said the 1,4462.12 sq km area the ministry is allowing RIL to retain includes the currently producing D1&D3 gas fields and D26 (MA) oil and gas field. Besides, a cluster of four satellite fields (D2, D6, D19 and D22) and two other significant discoveries (D42 and D34) for which investment plans have already been approved, are also being allowed to be retained by RIL. The area allowed to be retained also includes three yet-to-be-confirmed discoveries, of D29, D30 and D31 with 0.345 trillion cubic feet of reserves, as Moily felt the DGH had been unfair in denying their existence.
Moily agreed with RIL's contention that the company be allowed to conduct tests to confirm the three finds. RIL, under the contractual requirement of retaining only the area where discoveries have been made, had offered to give up or relinquish 5,367 sq km out of the total 7,645 sq km area in the Bay of Bengal KG-D6 block.