RIL also reported measures taken to check falling output in the KG-D6 field.
In its first decision, the Cabinet Committee on Investment (CCI) on Wednesday cleared Reliance Industries' producing KG-D6 block and gas discovery area NEC-25 along with 3 other areas where the Defence Ministry had either barred oil and gas activity or put stringent conditions on that.
Oil Ministry officials insisted that Defence Ministry cannot withdraw the clearance after 12 years of exploration.
It was agreed at the meeting to recommend to the competent authority on two issues namely the Declaration of Commerciality of certain wells in the NEC 25 and KG D6.
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.
Due to poor hydrocarbon prospects, BP surrendered nine out of the 21 oil and gas blocks where it had bought 30 per cent stake from Reliance Industries for $7.2 billion
Cabinet Committee on Economic Affairs had on July 22 cleared the sale of stake by RIL to BP in 21 blocks.
A day after Reliance Industries Ltd announced sale of 30 per cent interest in its 23 oil and gas blocks, Canada-based Niko Resources, RIL's partner in three fields - D6, NEC 25 and D4 - on Tuesday said it has the option to increase its stake in the fields by up to 30 per cent from current working percentages.
Reliance Industries has found natural gas reserves in a well drilled on its NEC-25 block in Mahanadi basin, off the Orissa coast, the company's junior partner Niko Resources of Canada said on Friday.
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.
The government has formed a four-member panel of secretaries to suggest a new gas pricing mechanism.
Reliance Industries' gas field off the Orissa coast holds 2.3 trillion cubic feet of gas reserves, more than double the previous estimates.
Reliance Industries has made two more gas discoveries at its prodigious D6 and NEC-25 blocks off the east coast, the company's junior partner Niko Resources of Canada announced.
Reliance Industries is on the verge of a 16th gas discovery in deep sea block D6 off the Andhra coast, and has made a sixth consecutive gas find in block NEC-25, off Orissa coast.
The projected output will come from satellite fields in the eastern offshore KG-D6 block as well as North East Coast block NEC-25, off the West Bengal coast.
Billionaire Mukesh Ambani's Reliance Industries has announced the contours of carving out of its oil-to-chemicals (O2C) business into an independent unit with a USD 25 billion loan from the parent, as it looks to unlock value by selling stakes to global investors like Saudi Aramco.
The company has been in talks with ConocoPhillips and Shell for some time. It now says the MoD's stringent norms on exploration in 'no-go' areas is posing a big challenge in taking the deal forward.
A four-member panel of secretaries is likely to submit its report on a new gas pricing mechanism to the government by Wednesday.
RIL-BP, who are currently producing about 11.8 million standard cubic metres per day of gas from the flagging eastern offshore KG-D6 block, is targeting newer fields in KG-D6 block and gas discoveries in neighbouring north-east coast and Cauvery basin to raise output.
An expert panel approved policy for development of gas fields.
RIL, its partner BP plc of UK will invest about Rs 6,000 crore (Rs 60 billion) by 2016 to help sustain and improve recovery from the two main gas fields.
Credit Suisse said $5.6 may work for Reliance Industries' R-Series gas field in the KG-D6 block but the economics for its satellite fields and NEC-25 block are uncertain.
Gas production from Krishna Godavari basin block has dropped to just over 12 mmscmd and RIL is carrying out workover on main Dhirubhai-1 and 3 gas fields.
RIL-BP currently produce gas from Dhirubhai-1 and 3 field and oil and gas from MA field, three of the over one-and-half dozen discoveries made in KG-D6 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.
RIL may go to arbitration which may lead to further delay in production and extra cost associated with the arbitration.
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.
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.
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