Oil Min seeks legal opinion in RIL issue

Oil Min seeks legal opinion in RIL issue

The Oil Ministry has sought legal opinion on slapping a higher penalty of $781 million on Reliance Industries for failing to produce pre-stated volumes of natural gas from its KG-D6 field in 2012-13.

According to Oil Secretary Vivek Rae, the government has already issued a notice to RIL for a $1 billion penalty for shortfall in production during 2010-11 and 2011-12. The firm has initiated arbitration against the levy.

We have already issued a notice for the penalty of $1 billion. For 2012-13, we are examining what needs to be done, whether the higher penalty is to be imposed and if so in what manner. We are seeking the advise of the Law Ministry right now," he told reporters here.

The Directorate General of Hydrocarbons had in July recommended to the Oil Ministry that $781 million of the cost RIL has incurred in KG-D6 fields be disallowed for producing only an average of 26.07 million cubic meters per day of gas as against the target of 86.73 mmcmd in 2012-13.

This will be in addition to over $1 billion in cost recovery already disallowed for output falling short of targets during 2010-11 and 2011-12.

DGH blames RIL for not drilling its committed quota of wells for the fall in production that has resulted in a large chunk of production facilities lying unused or under-utilised.

The Ministry wants the current rate of  $4.2 per million British thermal unit to continue to apply for gas produced from its D1 and D3 fields even after expiry of the current term on March 31, 2014.

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