The Petroleum Ministry and the DGH, during a meeting of the management committee (MC) here, refused to approve the investment stating that RIL and its partners. Mukesh Ambani-owned Reliance Industries Limited (RIL), the Petroleum Ministry and the Directorate General of Hydrocarbons (DGH) are understood to have refused approval to RIL's $1.5 billion investment plan for developing satellite fields to compensate for the gas output loss in the KG-basin D6 block.
BP Plc of Britain and Niko Resources of Canada, need to re-work the financial plan, as the original proposal was submitted in 2009 and since then there have been vast changes in the prices of energy and services. The investment plan has been pending for approval with the DGH and the Petroleum Ministry for almost two years now. RIL has already served a notice for arbitration proceedings on the Petroleum Ministry and the DGH over the move to disallow a part of the $5.8-billion expenditure that it had made so far to develop the Krishna Godavari (KG)-D6 block.
The Ministry had convened the meeting of the MC for Friday. Interestingly, the DGH, S. K. Srivastava, and the Joint Secretary (Exploration), D. N. Narasimhan Raju, skipped the meeting and instead deputed junior officials.
The MC also declined to approve the $30-million RIL plan to carry out engineering studies to submit a new field development plan (FDP), officials said. U.K.-based BP, which had earlier this year bought 30 per cent stake in KG-D6 and 22 other blocks of RIL for $7.2 billion has been banking on ‘next wave' strategy of developing satellite fields to reverse the fall in output at KG-D6 field, which has dipped to 41 million metric standard cubic metres per day (mmscmd) from 61.5 mmscmd achieved in March last year.
Officials said that without engineering studies, an accurate financial estimate was not possible. RIL had, in 2009, submitted an FDP for four satellite fields surrounding the currently producing Dhirubhai-1 and 3 fields in the KG-D6 block. It proposed to invest $1.529 billion for producing up to 10 mmscmd of gas from the D-2, D-6, D-19 and D-22 fields by 2016. The company has so far made 18 gas discoveries in the KG-D6 block. Of these, D-1 and D-3, the largest among the lot, were brought into production from April, 2009.
However, it had been directed by the Petroleum Ministry to dig four more wells before the April 30 deadline. The company, however, refused to do so.
RIL had, in July 2008, submitted an FDP for nine satellite gas discoveries with an estimated Capex of $5.6 billion and reserves of 1,708 billion cubic feet.It later submitted an optimised development plan for the four satellite gas fields.
