No gas hoarding at KG-D6, says RIL

Reliance Industries Limited (RIL) has denied allegations of gas hoarding in the D6 field and also sought appointment of international experts to verify its claims. Earlier this month, India Against Corruption activist Arvind Kejrival had claimed RIL was hoarding gas in the D6 field, to sell later at a higher price.

“Hoarding gas in the case of D1-D3 reservoir (in KG-D6 block) is a technical impossibility. Oil and gas reservoirs are dynamic systems and not inert cold storage facilities. They are both subject to and respond to production rates and flows,” P M S Prasad, executive director, wrote to petroleum secretary G C Chaturvedi on November 8. Prasad’s letter was also marked to C Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, who heads a committee to decide on gas pricing and production-sharing contracts. Prasad sought appointment of a team of international experts of repute to independently verify its estimates, as well as the action taken.

Drawing a parallel with the recent surprise faced by ONGC Videsh at Imperial fields in Russia, he said world over, oil and gas fields were known to be unpredictable and reserve estimates can be subject to variations.

“The D1-D3 field (in KG D6), known for its complexity and harsh working environment, has similarly not performed in the manner anticipated, in spite of the contractor’s (RIL’s) best efforts,” he added

Insisting on the need to avert misinformation, Prasad said, “If there were any genuine technical doubts about the information supplied by the operator (RIL), there was always the option of appointing a team of internationally reputed technical experts to assess reservoir conditions”.

Prasad said while, on the one hand, RIL has been accused of escalating costs and, on the other, it is being targeted for expending capital in drilling wells to increase production. “Four wells drilled after commencement of production in D1-D3 have conclusively proved that drilling additional wells would be infructuous. If the contractor (RIL) were really to benefit from escalating costs, we would have gone ahead and drilled all the wells demanded by DGH at an additional expense of nearly $2 billion,” he wrote. Instead, RIL has cut back on all infructuous expenditure and scaled down cost estimates by nearly $ 3 billion as all technical information now available showed that adding new wells in D1-D3 field would not add to production, he added.

Gas production from D1-D3 started declining from a plateau level of about 55 million standard cubic meters per day in August 2010. It is currently less than 20 mscmd.