Govt to consider RIL's investment plans for KG-D6 next week

The plans have been pending for the past two years

After much delay, the Oil Ministry has convened a meeting of an oversight panel next week to consider clearing annual investment plans for KG-D6 block of Reliance Industries that have been pending for the past two years.

The KG-D6 block Management Committee, headed by the Directorate General of Hydrocarbons (DGH), is also to consider declaring three significant gas finds commercially viable, sources privy to the development said.

RIL has been for some months now pressing for convening a meeting of the MC, where the oil ministry has significant presence, to get clearance for several pending investments that can help reverse the declining gas production at KG-D6.

The MC meeting finally being convened next week following a three-and-a-half hour long meeting RIL Executive Director P M S Prasad and BP India Head Shashi Mukundan had with Oil Minister S Jaipal Reddy last month to highlight delays in approval of critical investments.

Sources said Work programme and annual budgets, which are normally issued before beginning of a fiscal, are pending for 2011-12 and 2012-13 financial years in case of Dhirubhai-1 and 3 gas fields as well as MA oilfield in the KG-DWN-98/3 or KG-D6 block.

Also, the MC is yet to approve this year's spending on the R-Series gas field in the KG-D6 block.

With gas output at three currently producing fields in KG-D6 block halving to about 29 million cubic meters a day in the past two years, RIL and its partner BP of UK are pinning hopes on developing satellite fields to reverse the trend.

Sources said on MC agenda is commerciality of three gas satellite finds - D29, 30 and 31, which had previously been rejected by DGH as RIL had not performed its prescribed test to confirm the discoveries.

RIL had in February 2010 submitted the Declaration of Commerciality (DoC) of D29, 30 and 31 discoveries. But DGH rejected them saying the contractor (RIL) had not done a Drill-Stem Test (DST) to establish sustainable production levels.

The company was of the view that the finds can be declared commercial as extensive data including mud logs and Modular formation Dynamic Tester (MDT) data and corings have been collected.

Once the finds are declared commercial, RIL-BP would piece together an integrated development plan for the three finds together with 13 other discoveries, sources said.

RIL is the operator of KG-D6 block with 60% stake while BP has 30% interest. Niko Resources of Canada has the remaining 10% stake.