Oil Ministry and its technical arm DGH today refused approval to Reliance Industries' (RIL) $1.529 billion investment plan to develop satellite fields to offset fall in gas output at its flagging KG-D6 block.
At the KG-D6 block's oversight committee meeting here today, the ministry and the DGH blocked the investment saying RIL and its partners, BP Plc of the UK and Niko Resources of Canada, need to rework financials as the original proposal was submitted in 2009, sources privy to the deliberations said.
The investment plan has been pending for approval with the DGH and the Oil Ministry for almost two years and when it came up for approval at the Management Committee (MC) meeting today, the ministry and the DGH said investment plan needs to be reworked keeping changed prices of energy and services.
RIL request for approval of $30 million spending to do engineering studies so that a new field development plan can be submitted was also rejected by the MC, they said.
BP, which had earlier this year bought 30% stake in KG-D6 and 22 other blocks of RIL for $7.2 billion in India's largest ever foreign direct investment, has been banking on 'Next Wave' strategy of developing satellite fields to reverse the fall in output at KG-D6 field which has dipped to 41 million standard cubic metres per day from 61.5 mmscmd achieved in March last year.
Directorate General of Hydrocarbon (DGH) Director General SK Srivastava, who had yesterday confirmed his availability for the MC meeting, today did not attend the meeting and instead sent his junior. DN Narasimha Raju, Joint Secretary (Exploration), Ministry Of Petroleum and Natural Gas, too skipped the meeting and sent his juniors for the meet.
Without engineering studies, an accurate financial estimate is not possible, sources said.
RIL had in 2009 submitted a field development plan (FPD) for four satellite fields surrounding the currently producing Dhirubhai-1 and 3 (D1 and D3) fields in KG-D6 block. It proposed to invest $1.529 billion for producing up to 10 mmscmd of gas from the Dhirubhai-2, 6, 19 and 22 (D-2, D-6, D-19 and D-22) fields in the KG-D6 block by 2016.
The company has so far made 18 gas discoveries in the KG-D6 block. Of these, D-1 and D-3 the largest among the lot were brought into production from April, 2009.
It had in July, 2008, submitted a FDP for nine satellite gas discoveries (D-2, D-4, D-6, D-7, D-8, D-16, D-19, D-22 and D-23) with an estimated capex of $5.6 billion and reserves of 1,708 billion cubic feet (bcf).
RIL later submitted an optimised development plan for the four satellite gas fields in end-2009. It estimated 1,733 bcf of in-place gas reserves in the four finds, of which 626 bcf can be produced. However, the DGH trimmed down the estimates to 1,342 bcf and 617 bcf, respectively.
