Comments
The Government is looking to resolve the issues concerning Reliance Industries-operated East Coast gas fields in a month’s time.
But this may not be easy. The Directorate-General of Hydrocarbons and the contractors (RIL, BP and Niko Resources) are on different tracks on core issues such as reasons for drop in output, declaration of commerciality of three discoveries in the block and relinquishment of area related to five discoveries in the block.
Sources in the Government as well as those associated with the companies told Business Line that the Minister for Petroleum and Natural Gas, M. Veerappa Moily, and his senior Ministry officials realise that both the DGH and the contractors are holding diverse views. However, eager to monetise the discoveries at the earliest within the legal framework, the Ministry has asked them (DGH and contractors) to convene the block management committee meeting soon.
A management committee oversees the operations of the block and has nominees of contractors, DGH as well as the Ministry. The contractors are yet to propose a date to the DGH for the meeting.
When asked what the next step would be if the management committee fails to reach a decision, an official said “in case, there is no decision, the management committee can approach the Ministry.” If the matter comes before the Ministry, then a possibility of appointing an international consultant to assess the technical reasons for drop in output will arise. At present, DGH is seeking information from the contractors.
The assessment of the supply shortfall from the block, which the contractors could be asked to sell at $4.2/unit (million British thermal unit), which is lower than the new proposed gas price applicable from 2014, is also dependent on how convinced the DGH is with their arguments on falling output.
Meanwhile, the Ministry has already sought inter-ministerial views on a Cabinet note regarding pricing of shortfall volumes of natural gas based on commitments made in the Field Development Plan in respect of the producing discoveries in the block. It has proposed that the existing rate of $4.2/unit should continue to apply for gas from the producing fields (D1 and D3) even after expiry of the current term on March 31, 2014.
RIL-BP has raised the issue of relinquishment of 814 sq. km. area related to five discoveries proposed by the DGH with the Ministry. The partners have disagreed with the DGH’s evaluation.
It has also raised the issue of declaration of commerciality of three discoveries — D-29, D-30, and D-31. The DGH had not accepted the finds as it believed that conventional testing method was not followed.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.