The petroleum ministry on Thursday served a notice to Mukesh Ambani-led Reliance Industries Ltd (RIL) for violating the KG-D6 gas field contract and also threatened to disallow a cost recovery of $1.2 billion to the company for developing the field.
An RIL spokesperson confirmed receiving the notice but refused to give further details.
The ministry’s move comes shortly after RIL moved the Supreme Court last month seeking the appointment of an arbitrator on behalf of the government to decide on the dispute over cost recovery from the block.
RIL has so far made an expenditure of $5.7 billion in developing the fields but the petroleum ministry was advised by the DGH in October last year that the company should be disallowed $1.2 billion because RIL had drilled and completed only 18 out of the 31 wells in the block, resulting in lower gas output.
KG-D6 gas production averaged 48.13 mmcmd against the target of 53.40 mmcmd in 2010-11 and 38.61 mmcmd (up to October 31, 2011) against the target of 61.88 mmcmd, in 2011-12.