No higher price for RIL gas
till output row settled
NEW DELHI: The oil ministry will seek the Cabinet's nod for denying Reliance Industries Ltd
(RIL) a higher price for gas from the Andhra offshore field till its
claim of output falling due to geological reasons is proven. The Cabinet
had in June approved a new pricing formula for all domestic gas that
would see prices doubling to over $8 per unit from April when the new
regime kicks in.
The ministry's proposal in a way amounts to conceding CPI leader Gurudas Dasgupta's demand, which received indirect support from the finance ministry, that RIL should be asked to continue selling gas at old rate till it makes up for the shortfall in its supply commitment.
Output from the field has dropped to 10 mcmd (million cubic metres per day) from a peak of 54 mcmd. RIL claims the output has fallen due to sand and water choking wells and drilling more such wells would be infructuous. But Directorate General of Hydrocarbons (DGH) - the oil ministry's technical arm - has blamed the fall on the company's failure to drill the committed number of wells.
The ministry's proposal in a way amounts to conceding CPI leader Gurudas Dasgupta's demand, which received indirect support from the finance ministry, that RIL should be asked to continue selling gas at old rate till it makes up for the shortfall in its supply commitment.
Output from the field has dropped to 10 mcmd (million cubic metres per day) from a peak of 54 mcmd. RIL claims the output has fallen due to sand and water choking wells and drilling more such wells would be infructuous. But Directorate General of Hydrocarbons (DGH) - the oil ministry's technical arm - has blamed the fall on the company's failure to drill the committed number of wells.
"There is some technical
dispute about the quantum of gas available in some discoveries in KG-D6
block and that is a technical dispute between RIL and DGH. That matter
needs to be resolved before we take a final decision on applicability of
new (pricing) formula," petroleum secretary Vivek Rae told reporters.
Rae said the block
oversight panel, called the management committee headed by DGH, would
decide on the technical dispute: whether reserves are actually lower
than those estimated earlier or drilling new wells can raise output. The
fall in output now indicates the reserves in the two gas-producing
fields in the KG-D6 block are less than one-third of over 10 tcf
(trillion cubic feet) estimated two years before the field began
producing in April 2009.
"If necessary, we will
even get in international experts to give their independent opinion and
once it is resolved then all roads will be cleared either way," the
petroleum secretary added.
Arvind Kumar Pathak
PGDM 3rd
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