RIL slams DGH move to snatch gas discoveries

RIL slams DGH move to snatch gas discoveries

RIL slams DGH move to snatch gas discoveries

Reliance Industries has slammed the DGH’s move to snatch 86 per cent of its KG-D6 block area, including eight gas discoveries worth $10 billion, as “arbitrary” and said the oil regulator was responsible for the delay in developing the finds.

Reliance Executive Director P M S Prasad on August 24 wrote a strongly worded letter to Oil Secretary Vivek Rae, questioning the intent of the Directorate General of Hydrocarbons (DGH) in asking the company to give up 6,601 sq km out of the total 7,645 sq km area in the block on the grounds that the time line to develop the fields had expired.

Of the eight discoveries in the area, the DGH refused to consider investment plans for five, with 0.8 trillion cubic feet of reserves, saying they were not viable at the current price of $4.2 per million British thermal units.

The regulator refused to recognise the other three as discoveries in the absence of prescribed tests to confirm them and then disallowed pleas by Reliance and partner BP Plc for time to do the tests.

“In spite of the PSC providing for sale of gas at market prices, and the approved price of $4.2 being only valid until March 31, 2014, DGH insisted on evaluating the proposed development plan (of five discoveries) at a gas price of $4.2 and declared them to be unviable,” Prasad said, adding this was done even after the knowledge that the field would start production much later than April 2014.

In the 11-page letter with point-by-point rebuttals to the DGH claims, a copy of which was marked to Oil Minister M Veerappa Moily, Prasad asked Rae to “advise the concerned to rectify the errors and remove the hurdles which are needlessly delaying further progression in these discoveries.”

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