Oil regulator DGH wants Reliance Industries (RIL) to give up 86% of its KG-D6 gas block area, including 8 gas discoveries worth at least $5 billion, saying that the firm has overshot the time allotted to it for developing the area.
Rejecting RIL’s offer to relinquish 4,233 sq km of “low prospectivity area” in the eastern offshore KG-DWN-98/3 or KG-D6 block, the Directorate General of Hydrocarbons (DGH) has stated that the company should contractually give up 6,601 sq km out of the total 7,645 sq km total area in the block.
In a 6-page note excluding 3 annexures, DGH director general RN Choubey on April 15 wrote to oil secretary Vivek Rae that of the 19 oil and gas discoveries claimed by RIL, three finds have not been established as commercially viable in absence of test data and the company has not submitted any investment plans for another five.
“Ministry of petroleum and natural gas may intimate the contractor (RIL) about cessation of petroleum exploration license in respect of 6,601 sq km of contract area in the first instance in the block KG-DWN-98/3 under Article 3.11 of PSC,” he wrote.
He said the area proposed for cessation has at least 1.15 trillion cubic feet of known recoverable gas reserves valued at $4.83 billion at current prices.
Of the 19 finds, RIL began crude oil production from MA field in September 2008. It started gas output from MA field and Dhirubhai-1 & 3, in April 2009.
“Of the rest, Declaration of Commerciality (DoC), the first step towards monetisation, for D29, 30, 31 and 42 has not been approved by DGH ‘because of lack of sustainable production test data,” DGH wrote.