Reliance Industries paid the Government $78.88 million as penalty for failing to meet its commitments under the production sharing contract over the last three years (2009-10 to 2011-12).

Responding to a Lok Sabha question if private players had been penalised for production shortfalls, Minister of State for Petroleum Panabaaka Lakshmi said the actual cumulative gas production for D-1, D-3 fields of KG D6 Block up to March 31, 2012, was 1.584 trillion cubic feet against the projected 2.030 trillion cubic feet in the addendum to the initial field development plan for the period.

The Minister said the Directorate-General of Hydrocarbons had reported that the dip in production from the block in 2011-12 was because of the 18 gas producing wells in the D-1 and D-3 fields, six had ceased to produce due to water/sand ingress. Also, out of the six oil/gas producing wells in MA fields in the block, two had ceased to flow oil/gas because of water ingress.

Non-drilling of the required number of wells in D-1 and D-3 fields by the contractor in line with the addendum to the initial field development plan approved by the block management committee was cited as another reason for the output not improving.

Lakshmi said that RIL had attributed various reasons for reduction in reserves from the fields, such as production performance, pressure decline, early water encroachment, reduced contribution from the sands outside the main channel areas, and geological models.

The Government, in May last year issued a notice for proportionate disallowance of cost of production facilities amounting to $1.005 billion. RIL had invoked arbitration proceedings in the matter, and the Government had also appointed arbitrator, the Minister said.

richa.mishra@thehindu.co.in

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