The Hindu Business Line : Reliance gas find: DGH told to appoint consultant

New Delhi April 4 The Petroleum Ministry has asked the Directorate-General of Hydrocarbons (DGH) to identify an independent consultant to assess the hydrocarbon reserves and field development plan of Reliance Industries Ltd (RIL) in the Krishna-Godavari (KG) basin.

Sources told Business Line that concerns were raised by certain quarters including the Left Parties that the development cost of D6 fields of RIL, where the company has struck a large quantum of gas, was very high and will impact the Government's share of profit.

Cost concerns

"We have asked the DGH to appoint a global consultant so that all concerns can be addressed. However, no timeframe has been given to the DGH for this," the sources said.

Asked whether this meant that the Ministry was not satisfied with the current procedure, where the management committee approves the field development plan (FDP) and the DGH gives his nod, the sources explained, "It is not that we are doubting any of these assessments, but we just want to clear all doubts. We are not saying that the nod given by management committee should be held back."

The management committee of the blocks has a Government nominee as well. This mechanism could be adopted for others, they said.

Third-party audit

Recently, the Petroleum Ministry had asked ONGC to get a third party audit of each well it drills to avoid high input costs. The company has appointed international reservoir consultant DeGolyer & McNaughton (D&M) for third party audit of every well it drills.

The management committee has approved Reliance's revised FDP. RIL has increased its estimated development cost to $5.2 billion in bringing to production Dhirubhai-1 and Dhirubhai-3 fields in the prolific block KG-D6 in Krishna Godavari basin by June 2008.

Reliance aims to produce 80 million standard cubic metres per day (mscmd) from Dhirubhai 1 and 3. It will begin producing less than 40 mscmd gas in June 2008 and raise it to a peak output of 80 mscmd in the next five months.

According to industry sources, the doubling of the FDP cost since 2004 was also on account of increased production planned. In 2004, Reliance had planned facilities for producing only 40 mscmd.

The company has got an assessment of the D6 gas reserves from Gaffney, Cline and Associates, which had put recoverable reserves at 11.3 tcf. However for the revised FDP, for which the company got the approval, a third party assessment is required.

More Stories on : Petroleum | Reliance Industries Ltd

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page