Millennium Post

Oil watchdog rejects RIL’s two discoveries

Upstream oil watchdog DGH has refused to recognise two significant natural gas discoveries that Reliance Industries (RIL) had made in a Mahanadi basin block, because the company failed to conduct its prescribed test to ascertain the find.

The Directorate General of Hydrocarbons (DGH) in March this year told RIL that Dhirubhai 32 and 40 (D-32 & D-40) gas finds in the Mahanadi basin block NEC-25 (NEC-OSN-97/2) cannot be recognised as a discovery because RIL had not carried out drill stem tests (DSTs) on them, sources said.

RIL says the two finds, on which it had conducted other tests, may hold 663 billion cubic feet of gas reserves and can produce 170 million standard cubic feet per day from six wells.

It had proposed an investment of $1.17 billion in developing the finds and another USD 23.5 million annual operative expenditure in producing 476 billion cubic feet of gas over the life of the field.

Sources said RIL wrote to DGH seeking a re-look at the declaration of commerciality (DoC) of D-23 and D-40 finds but the upstream regulator turned that down saying without DST tests it cannot declare the two finds commercially viable.

DoC is a pre-requistie for developing a find, and unless the regulator and the government gives DoC, no operator can invest any money.

DGH told the company that two discoveries had already been reviewed and rejected by the block oversight committee, called the management committee. The panel is headed by DGH and also includes representatives from the oil ministry.
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