Govt asks RIL to surrender 81% of KG-D6 gas block

Govt asks RIL to surrender 81% of KG-D6 gas block

Govt asks RIL to surrender 81% of KG-D6 gas block

The government on Wednesday sent a notice to Reliance Industries (RIL) to surrender 81 per cent of its KG-D6 gas block, including five discoveries, as the time allocated for producing from them has expired.

“I think the notice (for relinquishment) has gone. If it hasn't yet gone, it will go today. We plan to send them the notice today,” Oil Minister M Veerappa Moily said.

The five discoveries hold 0.805 trillion cubic feet of reserves, or about one-fourth of the restated reserves in the currently producing Dhirubhai-1 and 3 (D1&D3) fields in KG-D6 block, and are worth $10 billion at current imported cost of gas.

Reports quoting industry sources however said that RIL retained real meat in the 20 per cent of the KG-D6 area that it retained and therefore, has not lost much in terms of giving away 80 per cent back to government.

The Oil Ministry will also move a cabinet note soon to deny the new $8.4 per million British thermal unit price for gas from D1&D3. This would be done on the grounds that a fall in output to 10 million standard cubic metres per day from 54 mmscmd achieved in March 2010, instead of rising to projected 80 mmscmd, was due to RIL’s failure to drill the requisite number of wells.

“The gas pricing note to the Cabinet will go shortly,” Moily said.

RIL will be allowed the new price only if its arguments of geological complexities being responsible for the fall in production are proved. This is the second penalty that is being sought to be imposed on RIL. The ministry has already moved to deny $1.8 billion of its cost for the same reasons.

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