The directorate general of hydrocarbons (DGH) has refused to play mediator in the tussle between ONGC and Reliance Industries (RIL) over the alleged connectivity of reservoirs in their blocks adjacent to each other in the Krishna Godavari (KG) basin.

With the regulator’s hands-off approach, the row doesn’t seem to be ending anytime soon.

The DGH’s decision to stay out of the matter follows a recent meeting chaired by it on the issue ending inconclusively. At the meeting, both companies stuck to their views, sources privy to the development told FE.

?There is no new development,? said an official with one of the exploration companies, indicating that they are yet to reach on a conclusion whether to appoint an independent third party consultant to carry out a study to find out if there is any hydrocarbon overlap.

According to officials at DGH, continuity of reservoirs is a global geological occurrence while exploring oil and gas. But, in the Indian context, it may not be easy to sort out the issue if connectivity is established because of complexity in the production sharing contract (PSC). Rather, such issues need to be resolved by the explorers among themselves than seeking regulator’s interference, these officials said.

ONGC’s block KG-DWN 98/2, which is yet to start production, lies next to RIL’s KG-DWN-98/3, or commonly known as KG-D6. The Mukesh Ambani-controlled firm’s block is in commercial production since 2009. The output from KG-D6 is hovering around 13 mmscmd after it touched a peak of 67-68 mmscmd in 2010.

The two firms have shared seismic information on the blocks and have tried to figure out if they are connected underground. The government-owned explorer ONGC wants to appoint an independent consultant to arrive at a conclusion as it is seems confident of the connectivity of the blocks.

At present, it is not clear how much time may be taken to decide on the issue. ONGC is yet to drill more wells to commence production from northern area of the block, which is expected by 2017. It has submitted the declaration of commerciality to DGH and expects to drill about 2-3 tcf of gas. In case the connectivity between the reservoirs is established, the reserves would have to be shared and pro-rata allocation of volumes may take place.

This is not the first time ONGC has hit such a hurdle. It encountered similar case of reservoir connectivity in the Olpad fields in Gujarat where it claimed connectivity existed with its fields and the Bheema fields of Niko Resources. The issue is yet to be resolved. On the other hand, there are earlier cases, where Niko and Cairn amicably settled such as issue in the Cambay basin.

Siddhartha P Saikia