has already agreed to arbitration under Article 33 of the PSC on the question of disallowance of cost recovery due to a decline in production, downgrading of reserves and attendant issues. “Hence appointment of another body is redundant and will compromise the arbitration process,” the MC resolution states.
The oil ministry will soon move a Cabinet note seeking to prevent RIL from charging a higher price until it can be ascertained that the deficit was the because of geological reasons.
RIL officials state that Indian consultants do not have the expertise to study deep-water blocks like the KG-D6 as the country has little experience in producing from such challenging terrain. The KG-D6 field is the only significant deep-water producing asset in the country.
“If the government is citing the PSC to say that no international expert can be appointed to verify reasons for fall in KG-D6 output, then how was the one-man reservoir expert Gopalakrishnan appointed by DGH and on whose recommendations were RIL and BP being penalised?” asked an RIL official.
A KG-D6 block oversight panel headed by the DGH had earlier refused to take a view on appointing renowned reservoir consultants Ryder Scott, DeGolyer and MacNaughton, Gaffney, Cline & Associates or Netherland, Sewell & Associates to validate reasons for the fall in gas output.