The Centre has come down hard on domestic oil exploration firms for missing their production targets according to the minimum work programme. Under the penalty provision of the production sharing contract, the oil firms had to shell out $131.16 million as liquidated damage to the government.
The country’s largest private oil and gas explorer Reliance Industries, whose gas production declined significantly, paid the government $78.88 million.
RIL?s KG-D6 fields, which began production in April 2009, hit a peak of 69.43 mmscmd in March 2010 before water and sand ingress led to the shutting down of more than one-third of the well.
Other public sector explorers such as ONGC and OIL paid $39.30 and $6.09 million to the government.
The peak output of Reliance?s KG-D6 block comprises 66.35 mmscmd from D1 and D3 and 3.07 mmscmd from its MA field, the only oil discovery on the block. The D1 and D3 outputs have now dipped to around 12-13 mmscmd, while gas production from the MA field has came down to below 5 mmscmd.
Gas production from the D1 and D3 fields, operated by RIL and BP, constitute about 60-66% of total gas production. According to the field development plan, RIL has to drill a total of eight development wells in the satellite fields of KG- D6. Gas from the new fields is expected to flow in the middle of 2016. But in view of the sharp decline in output from the block, the Directorate General of Hydrocarbons (DGH), the technical regulator, cautioned the company to keep a close watch on the new field.
The CAG in it’s report said that in nearly 40% of the projects, ONGC took more than 2 years to complete drilling activities of committed exploratory wells within the phase. This led to an extension of time and payment of liquidated damages to oil ministry for not drilling 24 wells in the 13 blocks within the committed period.