iconimg Thursday, May 07, 2015

Press Trust Of India
New Delhi, September 30, 2013
Mukesh Ambani-led Reliance Industries Ltd (RIL) has said it was being punished twice over — first with a $1.78-billion penalty and then by being denied a gas price revision — for a single crime of not producing in line with projections that were not even contractual commitments.

RIL and its partner BP plc on September 18 made a detailed presentation to oil minister M Veerappa Moily on issues around its main D1and D3 fields in its eastern offshore KG-D6 block where output has fallen to less than a one-fifth of 10 million metric standard cubic metres per day instead of rising to 80 mmscmd.

The oil ministry, which sees production not meeting stated targets as breach of contract, has levied $1.786 billion in penalty by way of disallowing cost incurred in last three fiscal year. It also plans to deny RIL the benefit of the new price after the current $4.2 expires in April next year.

“A double penalty to the contractor: On one hand cost recovery being disallowed, on the other market price being denied,” RIL said in the presentation.

It also said that under the production sharing contract, output figures in a development plan are only estimates and not commitments.