The Oil Ministry is seeking Cabinet nod to allow Reliance Industries to retain three gas discoveries worth $1.45 billion in the eastern offshore KG-D6 block even after expiry of timelines.
An empowered group of ministers on April 9 decided to give any unutilised KG-D6 gas to steel plants who are currently not being supplied their full share of administered price fuel, official sources said. After gas-based steel plants, allocations would also be made to existing gas-fired power plants and to other power plants, including captive power plants depending upon the availability of the unutilised gas.
In addition to undertaking to validate prospects identified by the joint venture, GCA employed a play-based exploration methodology on the D3 block to address both the current prospect inventory and the 'yet to find' resource potential. In D3, GCA estimated 9.5 Tcf of inplace reseves. D-3 and D-9 blocks in the same KG basin may hold 9.5 Tcf and 10.8 Tcf of gas reserves respectively, UK-based Hary Oil and Gas Plc said.
While the government had in June approved a new formula for pricing of all domestically produced natural gas, the Cabinet yesterday allowed the same principles to also be applied to Reliance Industries' currently producing fields in KG-D6 block subject to certain conditions.
RIL, which has faced numerous delays in getting approvals and shifting goal-posts, said the country did not have a stable policy regime and this was responsible for exit of global energy giants like Royal Dutch Shell, BHP Biliton of Australia, Statoil of Norway and Brazil's Petrobras.
The government has asked Reliance Industries to supply natural gas from the company's eastern offshore D6 fields to the beleaguered Dabhol power plant, a segment that gets top preference for gas allocation along with fertiliser units.
The empowered group of ministers (EGoM) on gas headed by External Affairs Minister Pranab Mukherjee on Thursday decided that gas allocation from RIL's D-6 block will be made to power projects subject to availability and without prejudice to court decisions, according to a government release.
State-owned Oil and Natural Gas Corp (ONGC) has written to the Oil Ministry seeking appointment of an international expert to assess if Reliance Industries Ltd was drawing out any of its gas in KG basin.
ONGC and RIL bill their consumers like fertiliser plants and power stations in US dollar.
RIL had drawn 58.67 bcm from the wells up to March 31, 2015.
The Supreme Court on Friday granted six weeks time to Mukesh Ambani's Reliance Industries Ltd (RIL) to respond to the final CAG report which found alleged irregularities including in payments made to the contractors on drilling of D6 wells at the Krishna-Godavari basin.
The feat is the second one for the Indian Space Research Organisation scientists in using the indigenously made cryogenic stage after the January 5, 2014 launch of GSLV-D5.
The output was behind target in 2015-16 as well and the government is yet to issue a cost disallowance notice for that
RIL is keen to hike gas price from April 2014 but due to some technical glitches, it may not be able to pass on burden of high production cost to customers.
A report, by DeGoyler and MacNaughton, has put a question mark on the future production from the five ONGC discoveries.
"The letter approving a price of $4.20 per million British thermal unit (mBtu) for first five years of production from KG-D6 was issued by the Petroleum Ministry on Thursday," a source familiar with the development said.
Reliance in the first phase is developing Dhirubhai-1 and 3, the first two of the 15 discoveries in the 7,645-square- kilometre KG-D6 block. Initial output is likely to be 40 million standard cubic meters per day (mmscmd), which will rise to 60 mmscmd in 2009-10.
Government has put on auction the gas discovery area it snatched from Reliance Industries in KG-D6 block and the field that Cairn India is seeking to regain around its Rajasthan block.
The bank guarantee, which will be equivalent to the incremental revenue that RIL will get from the new gas price, will be encashed if it is proved that the company hoarded gas or deliberately suppressed production at the main D1&D3 fields in the eastern offshore KG-D6 block since 2010-11.
India has seen rapid progress in various big-budget infrastructure projects.
CPM leader Tapen Sen has asked Prime Minister Manmohan Singh for a probe into what he called 'artifical inflation' in Reliance Industries' KG-D6 spend and the Mukesh Ambani-run firm's 'manipulation' of gas price.
With CAG alleging that Mukesh Ambani-run Reliance Industries was delaying furnishing of records for audit, Oil Minister M Veerappa Moily on Friday said there was no problem and "everybody" was cooperating.
A week after doubling of natural gas prices was approved, the Oil Ministry on Friday rebutted charges of the move resulting in windfall gains to Reliance Industries, saying new gas production from the company's fields will not start before 2017-18.
Fitch Ratings on Tuesday said a higher natural gas price will help improve Reliance Industries' profitability in 2014-15 fiscal and would lead it to invest more in raising production.
Concerns on lower natural gas transmission, LPG rate cut & APM gas price hike might be priced in but no positive triggers
Oil and Natural Gas Corporation said on Tuesday it was making an annual loss of Rs 700 crore (Rs 7 billion) on sale of gas at administered prices even as Reliance Industries stated it followed a transparent process to discover the price of gas.
Over the next five years, plans to pump money in KG DG, refining, petrochemical sectors, retail and telecom.
The committee said whatever benefit RIL received in terms of the migrated gas is liable to be returned to the government.
Reliance Industries Limited has made two natural gas discoveries on the east and west coast adding to the vast hydrocarbon reserves it has found in the past few years.
If the EC decides to put on hold a gas price revision for RIL, it would set a precedent for pricing decisions of the government and policy decisions taken but undergoing procedural delays.
RIL is peeved with the govt for blocking of approvals and non-revision of gas price produced from its underperforming KG-D6 block.
Dudley and Ambani, assisted by BP India head Sashi Mukundan and RIL Executive Director P M S Prasad, primarily discussed RIL-BP's oil and gas investments at the meeting that lasted nearly one-and-half hour.
RIL also reported measures taken to check falling output in the KG-D6 field.
We will now get CAG to do the audit for the last 3-4 years, says the secretary.
RIL has proposed to charge the government- fixed rate for natural gas on a gross calorific value (GCV) basis, instead of net calorific value (NCV).
Defence Ministry has declared 7 blocks including RIL's KG-D6 which has been in production since September 2008 and its gas discovery block NEC-25 for reasons like overlapping with proposed Naval base or being close to missile launching and Air Force exercise area.
BSE Consumer Durable and Oil & Gas indices surged by nearly 3% each followed by counters like Metal, TECk, Power, Healthcare, Banks, Realty and IT, all gaining between 1-2% each.
The project is currently generating 240 MW against its total capacity of 1,967 MW.
Based on the panel's formula, the base price of domestic natural gas comes to around $7.4 per million British thermal unit (mBtu), but the pricing formula proposed by RIL, officials say, translates the price into $13-14 an mBtu.
Ministry returns guarantee saying new price has not been notified and RIL would have to submit surety as and when it is announced.
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