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Oil Min rep sitting on approvals for 8 Reliance gas finds: DGH

The Oil Ministry representative has not approved half the gas finds the company has made.

Written by Agencies | New Delhi |
September 27, 2011 3:53:23 pm

The Oil Ministry representative on the panel that oversees operations in Reliance Industries’ KG-D6 block has not approved almost half the gas finds the company has made,even though over years have elapsed since they were struck,oil regulator DGH has said.

The Directorate General of Hydrocarbons (DGH),forwarding a note to the ministry for approval of RIL’s investment plans for four satellite finds in the Krishna-Godavari basin block,stated that a Declaration of Commerciality for eight finds has been awaiting the approval of the Oil Ministry since November,2007.

“Declaration of Commerciality (DoC) of eight satellite gas discoveries (D-4,D-6,D-7,D-8,D-16,D-19,D-22 and D-23) was reviewed in the Management Committee (MC) meeting on November 22,2007,” the DGH note said.

“The MC resolution (declaring the eight finds as viable for commercial production of gas) had been signed by MC nominees of the joint venture (RIL) and its minority partner (Niko Resources of Canada) and the first government nominee (DGH). Ministry of Petroleum and Natural Gas’ consent is still awaited on MC resolution,” it said.

After a gas discovery is made,its potential is assessed to ascertain if it can be commercially produced. Once the DoC is approved by the MC,which oversees operations in the block,an investment plan is drawn up for bringing the gas to production.

Unless,the Oil Ministry grants a DoC,RIL cannot begin work on the field development plan.

RIL has so far made 18 gas finds in block KG-DWN-98/3,or KG-D6,which lies off the Andhra coast. Of these,two – Dhirubhai-1 and 3,or D1 and D3 — have been put on production and nine others (D-2,D-4,D-6,D-7,D-8,D-16,D-19,D-22 and D-23) have been declared as commercially viable by DGH.

Of these nine finds,the Oil Ministry has sanctioned the DoC of only D-2,which was discovered in April,2002,around the same time as the landmark D-1 and D3 discoveries.

The DGH note said RIL submitted a field development plan for the nine satellite gas discoveries with an estimated capex of USD 5.6 billion and reserves of 1,708 billion cubic feet (BCF) in July,2008.

However,techno-economic feasibility studies carried by the DGH at the government-fixed gas price of USD 4.2 per mmBtu found them unviable,yielding a negative Net Present Value of USD 2.51 billion.

Subsequently,DGH asked RIL to optimise the plan. The firm submitted an optimised development plan for four gas fields (D-2,D-5,D-19 and D-22) in December,2009,proposing to invest USD 1.529 billion to produce up to 10 million standard cubic metres per day of gas in five years’ time.

While D-6 was discovered in April,2003,D-19 was struck in December,2009,and D-22 in April,2005,the note said.

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