May 28 2020
Jaipal Reddy to visit RIL
18 February 2012

Jaipal Reddy to visit RIL D6 block following sharp decline in output

Oil minister Jaipal Reddy will visit the D6 block of Reliance Industries to familiarise himself with the situation following a sharp decline in output from India's biggest gas field, government officials said on Friday.

"He wants to understand the situation on the ground and talk to the people involved with the project," an oil ministry official said.

The minister's visit is significant as the government has faced criticism from the Comptroller and Auditor General for the oil ministry's handling of the block while customers are stranded with huge investments but have no natural gas for their plants. Reliance Industries has issued arbitration proceedings against possible moves to penalise it for the fall in output.

The government is concerned about the continuing fall in gas output, which has forced customers to import costly LNG. Oil ministry officials say Reliance Industries had written to the government that gas output from its D6 block was expected to drop by about 40% to 22.60 million standard cubic meters per day in 2013-14.

"RIL has told the Directorate General of Hydrocarbons that gas production from D6, including MA fields, will be 27.6 mmscmd in 2012-13 and 22.6 mmscmd in 2013-14," said an oil ministry official who did not want to be identified. He said the numbers indicated the estimated average production for the entire fiscal year, not any particular month.

On Tuesday, a government official had said output from the D6 block would fall to 27 mmscmd in the next two months.

A Reliance Industries source said the company had sent broad projections for output. The D6 field's current output is about 37 mmscmd, out of that 19 mmscmd is supplied to the power sector consumers. The oil ministry official said that if output falls as projected, the government will cut gas supply to power plants to 3-4 mmscmd from the current level of 19 mmscmd if output falls 40%.

Reliance had attributed the decline to geological complexity but the oil ministry blamed the company saying output fell because it drilled fewer wells than what was planned.



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