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‘Was RIL’s KG-D6 gas drop due to commercial cause?

With output from Reliance Industries Ltd's (RIL) eastern offshore Krishna Godavari-D6 fields dropping to an all-time low, a Parliamentary panel on Tuesday asked the Oil Ministry to find out if the decline was due to commercial considerations or the price of gas.

The Standing Committee on Petroleum and Natural Gas, in its report tabled in Parliament, noted with concern that the output from KG-D6 has been declining since 2010-11. 'From a peak of 80 million standard cubic meters per day (mmsmd), the gas production from KG-D6 has gone down to 16 mmsmd,' it pointed out.

Stating that it has not been informed of any valid reason for the lower production of gas in KG-D6 block, the panel said that it has noted Reliance Industries Ltd's demand for a higher natural gas price.

'The Committee would strongly urge the Ministry to adequately satisfy itself and convince the nation that the fall in production of natural gas in the Krishna Godavari-D6 block is not due to commercial considerations or the price at which the gas is to be sold,' the report said.

It asked the ministry to seriously look at the fall in output and take urgent steps to increase production.

'The Committee also expects the Ministry to apply the provisions of the Production Sharing Contract (PSC) with the contractor (RIL) strictly in letter and spirit in respect of the latter's failure to deliver the committed production of natural gas from KG-D6,' the report said.

RIL produced 39.31 mmscmd of gas from Dhirubhai-1 and 3 (D1&D3), the main gas fields in the KG-D6 block, in first year of production 2009-10 against a target of 27.62. The output in 2010-11 was 48.13 as opposed to a target of 53.40 mmscmd.Thereafter, production fell to 35.33 mmscmd in 2011-12 compared to the target of 61.88 mmscmd and to 13.06 mmscmd currently against a target of 80 mmscmd. The main reason attributed for the fall was water and sand ingress in wells.The MA oilfield in the same block saw output rise to 7.76 mmscmd in 2010-11 before dropping to 5.36 mmscmd this year. The Committee said that as part of corrective measures, RIL has been asked to drill more wells and install a compressor to increase gas recovery.
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