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Oil regulator shrugs off RIL's new gas discovery

business Updated: Sep 11, 2010 13:12 IST
Anupama Airy
Anupama Airy
Hindustan Times
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In what is seen as a set back for Reliance Industries Ltd (RIL), upstream oil sector regulator, the Directorate General of Hydrocarbons (DGH), has refused to acknowledge the recent gas discovery announced by RIL and its UK-based partner Hardy Oil in the Krishna Godavari (KG)-D3 block on the eastern coast.

The discovery, announced on August 31, was RIL's fourth successive find in the KG-D3 block, close to the company's prolific KG-D6 area in the Bay of Bengal. Hardy Oil and Gas holds 10 per cent interest in the block. RIL is the operator of the block with 90 per cent interest.

Charging RIL with violation of contractual provisions, the DGH in its September 1 letter to RIL and Hardy Oil said the operator (RIL) did not give any notice to witness the discovery.

As no representative of the regulator was present to witness the gas discovery, the DGH said, "the notified gas discovery (D-52) in the block KG-DWN-2003/1 is not considered as gas discovery" and is in violation of Article 10.2 of the production sharing contract (PSC) between RIL the Government of India.

According to Article 10.2 of the PSC for the KG-D3 block, "If the contractor conducts a drill stem or production test with regard to any exploration well, it shall notify the government of the time of such test at least 48 hours prior to the proposed test, and the government shall have the right to have a representative present during such test."

Citing this, the DGH said, "The operator (RIL) has not provided any notice to the DGH for witnessing the said discovery, which is in violation of Article 10.2 of the PSC."

When contacted, an RIL spokesperson said: "We would not like to comment."

The block (KG-D3) was awarded to RIL in the fifth round of bidding under the New Exploration Licensing Policy.

This discovery by RIL has been named Dhirubhai-52. While the quantum of gas reserves was not announced, the potential commerciality of the discovery is being ascertained through more data gathering and analysis, Hardy Oil said on August 31.