Dispute resolution provisions in the production sharing contract remained unimplemented, while the regulator faltered, points out Jyoti Mukul.
Indian oil and gas exploration companies work in silos.
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The five discoveries -- D4, D7, D8, D16 and D23 - 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.
According to a source close to the development, the government is set to come out with a notification in this regard by the end of this week.
RIL had drawn 58.67 bcm from the wells up to March 31, 2015.
Reliance Industries and Cairn India want to drill exploration wells in already producing oil and gas fields, but the ministry's technical arm DGH had previously opined that such activity in an area that is producing hydrocarbons is not permissible under Production-Sharing Contract.
Energy conglomerate Reliance Industries and its partner BP plc on Friday said they have made a second deep-water gas condensate discovery in the Cauvery basin, off the east coast.
Directorate General of Hydrocarbons Director General Rajiv Nayan Choubey did not take calls made for comments.
While the Management Committee of KG-D6 block in August agreed to approval of capital spending plans pending for past three years, the resolution has so far not been signed.
India may soon see a new set of oil barons with lesser-known companies venturing into crude oil and natural gas production. These new kids on the block have come up through a mix of entrepreneurial grit and backing from oil industry veterans. Nippon Power, South Asia Consultancy, PFH (Poddar Family Holdings) Resources and Chennai-based Adbhoot Estates could be the first ones to start production from blocks awarded during the first round of Discovered Small Field (DSF-1) auctions. Adbhoot is in a 50:50 joint venture with the Bombay Stock Exchange-listed Hindustan Oil Exploration Company that has some five oil producing assets and over 10 blocks across the country.
Reliance Industries Limited had in late-August filed a revised field development plan for discoveries Dhirubhai-1 and 3 (D1&D3) in KG-DWN-98/3 cutting gas reserves to 3.10 Trillion cubic feet from 10.03 Tcf approved in 2006.
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.
It is shut due to high water and sand ingress and it awaits regulatory nod to carry out urgent workover.
Cairn India and UK's BG Group too replied to audit observations.
Days after a CAG draft report said his firm got out of turn favours from the oil ministry and its technical arm DGH, Reliance Industries chairman Mukesh Ambani on Friday met Prime Minister Manmohan Singh.
Reliance Industries has strongly defended its decision to impose a marketing margin over-and-above the government-approved sale price for KG-D6 gas, saying the levy was to cover for the risk and cost associated with marketing of gas.
CAG had said the increase in field cost would mean a lower profit take for the government.
GX Technology case led to police cases against Sibal.
Cairn India, which had made four discoveries in the KG-DWN-98/2 block before selling 90 per cent out of its 100 per cent stake in the block to ONGC in 2005, has written to the oil regulator DGH saying the state-owned firm is grossly overstating the reserves in block, sources said.
Reliance Industries may ask the government for a refund of its investment if it is forced to give up any part of the prolific KG-D6 block as it has spent a huge sum of money on exploration after obtaining necessary permission to retain the entire 7,645-sq km area.
Cairn India produces 125,000 barrels of crude oil per day (6.25 million tonnes a year) from Mangala oilfield, the largest among the 15 discoveries in the Rajasthan block RJ-ON-90/1.
Reliance has seen natural gas output fall to 50-52 mmscmd during recent times from over 60 mmscmd achieved in mid-2010 due to reservoir complexities.
The company is looking to invest more than $3 bn over the next three years.
Cairn India, whose success in Rajasthan may have propelled Reliance to bid for two blocks in the state, has submitted offers for only two blocks -- one onland and one offshore.
To proceed with a Cabinet proposal to grant the relaxations to RIL, the Election Commission's approval will be sought.
Reliance Industries has informed oil regulator DGH that four smaller gas finds surrounding the D-1 and D-3 fields in the Krishna-Godavari basin can be commercially exploited.
Reliance ADA Group challenged Sibal to bring on record anything to support his 'wild allegations,' while adding that it would file criminal proceedings against DGH.
Cairn India can produce up to 2,40,000 barrels per day from its prolific Rajasthan fields, equivalent to output from the nation's largest oilfield of Mumbai High, the company has informed the government.
State-owned Oil and Natural Gas Corp (ONGC) plans to invest $4.05 billion in producing natural gas from its ultra deepsea UD-1 discovery in a block that sits next to Reliance Industries' prolific KG-D6 fields.
Allegations against Sibal include approving Reliance Industries' four-fold increase in capital expenditure to $8.8 billion for the nation's largest gas field KG-D6 in return of personal benefits.
Dharmendra Pradhan lays bare the next course of action for his ministry and says RIL will have to pay the same price at which it produced the volumes.
DGH director general V K Sibal objected to Hardy, which holds 10 per cent stake in RIL-operated D3 and D9 blocks, making 'an unwarranted, unethical and premature announcement that is bound to mislead' and influence share price. Sibal on May 29 wrote to Securities and Exchange Board of India chairman C B Bhave asking the market regulator to take up with its counterpart in London the unauthorised statement made by Hardy about its assessment of reserves in the two blocks.
A proposal for extension from the Oil Ministry is pending clearance from Central Vigilance Commission and the Central Bureau of Investigation, which is probing allegations that he favoured Mukesh Ambani-led RIL in lieu of personal benefits.
Reliance, which had started crude oil production from the predominantly gas-rich KG-D6 block in September 2008, had on December 9 shut the oil field following equipment failure. Reliance was producing 10,000 to 12,000 barrels per day when the production was stopped.
In a presentation to investors in Mumbai last week, Aramane Giridhar, Joint Secretary (Exploration) gave detailed reasons for pendency of decisions in the Ministry of Petroleum and Natural Gas where officials approved of decisions but refused to issue formal orders, resulting in delays in production of oil and gas.
Reliance has submitted an initial development plan (IDP) for six gas discoveries in the NEC-25 block in Orissa, envisaging a production rate of 35-40 million standard cubic meters per day.Reliance has not detailed a production schedule from the six discoveries where it estimates a total potential of 8.2 Trillion cubic feet, of which 1.1 Tcf is recoverable.
Empowered group overrules DGH's recommendations.
According to an official close to the development, in the coming financial audit report, to be tabled in Parliament's Budget session next year, CAG will detail the slide in the government's share in petroleum sector profits due to a drop in gas production.
In all, Reliance has a stake in 34 exploration blocks in the country.
Transcript of the weekly market chat held on Tuesday.
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