The Hindu Business Line : DGH opts for consultant to assess Reliance reserves

Third party
Calgary-based D&M may have been selected
Development cost of RIL's D6 fields questioned
Reliance aims to produce 80 mscmd from D-1, D-3

New Delhi May 16 The Directorate-General of Hydrocarbons (DGH) is understood to have decided on an independent consultant to assess the hydrocarbon reserves and field development plan (FDP) of Reliance Industries Ltd (RIL) in the Krishna-Godavari (KG) Basin.

Indications are that Calgary-based DeGolyer & MacNaughton (D&M) has been selected for the job.

The consultant is likely to be given three months to complete the work, sources said.

If this method of assessment by an independent reservoir consultant is adopted, those in the business may have to undertake third party audit before making any announcements on their oil and gas finds.

Questions were being raised from certain quarters, including the Left Parties, on the development cost of RIL's D6 fields (where the company has struck large quantum of gas).

Following this, the Petroleum Ministry had asked the DGH to identify an independent consultant for assessing RIL's reserves.

Concerns were expressed that the development cost was very high and that it would impact the Government's share of profit.

RIL's revised FDP has its management committee approval.

It has increased estimated development cost to $5.2 billion in bringing to production D-1 and D-3 fields in the prolific KG-D6 block by June 2008. Reliance aims to produce 80 million standard cubic metres per day (mscmd) from D-1 and D-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 proposed increase in production.

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.

However, for the revised FDP for which the company got the approval, a third party assessment is required.

This block was awarded to the consortium of RIL (90 per cent) and NIKO (10 per cent) under NELP I round of bidding.

The Ministry, while maintaining that it was satisfied by the current procedure of assessment where the management committee approves the field development plan (FDP) followed by the DGH nod, had said that the reason for getting an independent assessment done was to clear all doubts on hydrocarbon reserves.

The management committee of the blocks has a Government nominee as well.

The Ministry had already asked ONGC to get a third party audit of each well it drills to avoid high input costs.

The company has appointed D&M for third party audit of every well it drills.

Currently, the company is in talks with the consultant on which find it wants assessed.

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