New gas pricing policy will apply uniformly to all, says Moily

New gas price $8.4 per million British thermal has been adopted by the Oil Ministry on the recommendation of the Rangarajan committee

Amidst talk of Reliance Industries being denied a higher price for gas due to output from KG-D6 not matching targets, Oil Minister M Veerappa Moily today said the new gas pricing policy would apply uniformly to all.

 

"There are no grey areas. The policy which we have adopted (based) on the recommendation of the Rangarajan Committee will be applicable to everyone," he told reporters on sidelines of the Global HSE Conference organised by Cairn India here.

 

Asked if the new price of about $8.4 per million British thermal unit would not apply to RIL's currently producing D1&D3 fields that have produced much less than target, he said, "Don't ask (me that). When I said (price will apply uniformly) did I qualify."

 

Pressed further if the pricing of gas based on the average of rates at international hubs and actual cost of imported LNG would apply to all domestic producers uniformly, Moily said: "Yes".

 

He refused to be drawn into the issue of RIL being denied a higher price of gas produced from its main fields in the eastern offshore KG-D6 block till the dispute over the reasons for output not matching targets was resolved.

 

His ministry is mulling applying the current rate of $4.2 per mmBtu for gas produced from Dhirubhai-1 and 3 (D1&D3) fields even after expiry of the current term on March 31, 2014.

 

DGH believes output from D1&D3 fell to 10 million standard cubic metres a day from 53-54 mmscmd achieved in March 2010 because RIL did not drill its committed number of wells. More wells, it believes, would increase output.

 

RIL, on the other hand, blames unforeseen geological complexities for the fall in output and believes the reserves in D1&D3 are actually less than one-third of 10.03 Trillion cubic feet predicted two years before the field began output in April 2009.

 

The Ministry wants to find who is right and till then it is mulling if the new price should not apply to D1&D3 fields. The new rates would, however, apply to the currently producing MA oil and gas field in the same block as well as new fields that come into production in coming years.

 

Moily said he had met officials of RIL and its partner BP last year for three-and-half hours. "That demonstrated the will of the government to sort out issues."

 

The issues pertained mostly to the debate over the reasons for fall in production.

 

"I am hopeful of results (coming out of the discussions)," he said.