House panel: Treat RIL’s KG-D6 failure as ‘contractual default’

The “failure” to drill the committed 50 wells on the KG-D6 fields led to natural gas output dramatically falling over the past three years.

Written by Press Trust Of India | New Delhi | Published: December 11, 2013 1:32 am

Criticising Reliance Industries (RIL) for allegedly failing to implement approved plan for KG-D6 gas fields,a Parliamentary Committee has asked government to treat the failure as contractual “default” and take necessary action.

The “failure” to drill the committed 50 wells on the KG-D6 fields led to natural gas output dramatically falling over the past three years.

“Non-adherence by the contractor (RIL) to approved field development plan should be construed as ‘default’ and not just failure and remedial action by the (oil) ministry in this regard must be premised on ‘default’ by the contractor and not ‘failure’,” the Standing Committee on Petroleum and Natural Gas said in a report tabled in Parliament on Tuesday. The panel,headed by Aruna Kumar Vundavalli,asked the ministry to “explore all possible options and take corrective measures to increase the natural gas production from KG-D6.”

With production falling from 55.89 million standard cubic meters per day in 2010-11 to 26.18 mmscmd in 2012-13,the ministry and upstream regulator DGH advised RIL to take certain corrective measures like drilling of committed quota of wells to increase natural gas production in KG-D6 block. “However,the contractor has failed to adhere to the corrective measures,” the report said.

An expert commissioned by the Directorate General of Hydrocarbons to study the decline in production,concluded that reserves in the main KG-D6 fields are as estimated earlier and remedial measures will help the production to go up.

RIL,on the other hand,blamed unforeseen geological complexities like water and sand ingress in wells and reservoir pressure dropping sharply,for falling output.

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