No obligation on production targets: RIL to OilMin

Refuting oil ministry charges on KG-D6 gas field output lagging targets, Reliance Industries has said there is no “obligation” in the contract to achieve certain levels of production and the government cannot levy penalty for not meeting indicative output levels.

Refuting oil ministry charges on KG-D6 gas field output lagging targets, Reliance Industries has said there is no “obligation” in the contract to achieve certain levels of production and the government cannot levy penalty for not meeting indicative output levels.

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“There is no obligation of the nature the government now implies, anywhere in the production sharing contract (PSC),” RIL’s counsel wrote to the oil ministry on June 8.

In a 13-page letter, A S Daya & Associates point-by-point rebutted charges that the ministry had levied in imposing a penalty of over $1 billion for current output of 31.6 million standard cubic meters per day falling way short of the target of 80 mmscmd.

Oil ministry says RIL did not drill committed wells which led to the fall in output and last month disallowed $1.005 billion of its cost already incurred saying lower production had led to under-utilisation of facilities.