The new cabinet-approved formula for hiking the price of gas should not leave prices open-ended, irrespective of the field it comes from, feels the finance ministry.
According to a senior ministry official who refused to be named, the ministry has reiterated this opinion while responding to a petroleum ministry’s note regarding Reliance Industries’ KG-D6 block.
North Block had expressed this view during the inter-ministerial discussions before the cabinet decision too, but was not accepted.
The petroleum ministry wants application of the new pricing formula ? meant to be effective from April 2014 ? to be kept in abeyance for RIL’s KGD6 block, till the issues concerning the fall in output are resolved.
A senior petroleum ministry official told FE that its cabinet note on the issue is being fine-tuned in consultation with the Planning Commission and finance ministry.
The finance ministry official quoted above said: ?The cabinet decision on (increasing) gas price was for all fields and was not specific to a particular field. The petroleum ministry had proposed if this decision could be kept in abeyance for KG-D6 until a decision on the issues related to the shortfall in production is taken. We have not recommended any specific cap on the price of gas from KG-D6 in our comments. We have only said that the issue of price cannot be left open ended.?
The official added that the issue of asking the contractor to relinquish the field for not meeting the terms of PSC was never part of our comments to petroleum ministry?s cabinet note. This, he asserted, was a separate issue.
The oil regulator DGH has blamed RIL?s failure to drill committed wells for the gas output falling by 80% to 10 million standard cubic metres per day from the main D1 & D3 fields in KG-D6 block, instead of rising to the planned 80 mscmd.
On the other hand, RIL is of the view that the reserves have dropped due to previously unknown geological factors and the undrilled quota of 11 wells would not increase production.
