The Government has slapped an additional penalty of $792 million on Reliance Industries for producing less-than-targeted natural gas from its eastern offshore KG-D6 block.
A notice disallowing $792 million out of the cost already incurred on the Bay of Bengal fields was sent to RIL on November 14, an Oil Ministry official said here. With this, a total of $1.797 billion penalty in the form of cost being disallowed has been levied on RIL for producing less-than-targeted output during the past three years.
The company has till date spent $10.76 billion on the block, which it can contractually recover from sale of oil and gas. It is obliged to share the profits with the Government only after recouping those expenses. The official said the cost has been disallowed as RIL and its partners BP plc of UK and Canada’s Niko Resources did not drill the committed number of wells, which led to output dropping by over 80 per cent from the main Dhirubhai-1 and 3 (D1 and D3) gas fields in the KG-D6 block.
D1 and D3 fields have in the first fours years of production (2009-10 to 2012-13) produced a total of 1.853 trillion cubic feet of gas, 1.196 tcf short of 3.049 tcf that RIL had committed to produce in the 2006 development plan.
But for the first year, the output has lagged the targets in all subsequent years, the official said.
RIL had built facilities to handle 80 million standard cubic metres per day of gas from D1 and D3 but the present output is just 8.78 mmscmd.