A regulatory panel overseeing the affairs of Reliance Industries? (RIL) most prolific KG-D6 gas block has approved field development investments for three years starting 2010-11 with riders, oil ministry sources said on Tuesday. The panel also gave conditional approval to ?declaration of the commerciality? of the D-29, D-30 and D-31 finds in the block.
The management committee for the block, production from which is gradually declining, is led by the Directorate General of Hydrocarbons, the oil ministry?s technical arm.
?There have been decisions at the meeting (of the committee). Some budgets were approved. Some clarifications about certain amounts are required, for which the contractors have sought time,? an oil ministry official said.
RIL has sought permission to invest in the development of the three fields attached to the KG-D6 block. The company can develop the field only after the commerciality of the fields is approved by the management committee. Investments are required to bring fields under production and step up D6 block output, which has plunged to 29 mmscmd from a high of 63 mmscmd reached in June 2010.
Earlier, oil minister S Jaipal Reddy promised expeditious clearances of the company?s investment proposals subject to certain riders. The ministry has asked RIL to give the Comptroller and Auditor General (CAG) access to all records and accounts of the D6 block in order to get the approvals.
?Conditions were set by the CAG which was conveyed to the operator. So, in these circumstances, the management committee will be addressing all the issues. Whatever the contractor needs technically or administratively to raise production, we will do,? Reddy had said.
?Approvals will be given subject to fulfillment of conditions,? Reddy had said.
Although there is no word from the ministry or RIL on the quantum of investments approved for the three fields, indications are that investment proposals worth $1.2-1.4 billion were given conditional approval.
?There is a severe shortage in the availability of gas in KG basin. It was to produce 80 million metric standard cubic metres a day (mmscmd) in the current year. Against this, it is producing only 29 mmscmd. Consequently, there is a painful need to re-allocate the reduced gas. This is leading to a genuine problem particularly in Andhra Pradesh,? the minister added.
Output from the block had been declining consistently over the last two years after peaking at 63 mmscmd in June 2010. The company has projected that the output may decline to sub-20 levels till 2014.