RIL, BP warn of shutting down KG-D6 field in 2015-16

Reliance Industries and partner BP Plc have warned of their KG-D6 gas field shutting down in 2015-16 if the government does not approve investments needed to keep the nation’s largest gas fields alive.

“That is a fear,” Oil Secretary G C Chaturvedi told reporters when asked if there was a possibility of the main producing fields in KG-D6 fields shutting down in future. Natural gas production from Dhirubhai-1 and 3 gas fields and MA oil field in the Bay of Bengal KG-DWN-98/3 or KG-D6 block has slid to about 26 million standard cubic meters per day from 61.5 mmscmd achieved in March 2010.

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“It (production) will keep coming down,” Chaturvedi said. “We are convinced that in a do-nothing scenario, production will keep coming down.”

RIL Executive Director P M S Prasad and BP India head Sashi Mukundan had in July met Oil Minister S Jaipal Reddy for nearly three and half hours to highlight the exigency facing the flagging KG-D6 fields due to his ministry not approving annual budgets and capital spending for three years.

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RIL-BP at the meeting had said output at KG-D6 will continue to fall in absence of interventions needed to revive some of the seven wells that had been shut due to water and sand ingress.

Chaturvedi said through the annual investments were agreed upon in an Oil Ministry-controlled block oversight committee in August, the resolutions reflecting them haven’t been signed due to certain issues.

The Oil Ministry wants RIL to give Comptroller and Auditor General of India (CAG) access to its books for conducting audit as a precondition for allowing future capital expenditure in the block.

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RIL says it is ready for any financial audit by CAG but will not agree on a performance audit, wherein technical decisions like selection of a particular technology or vendor for the complex deepsea operations may come in for questioning by a non-technical authority.

It says CAG is not authorised to do a performance audit either under the Act it was formed or under the Production Sharing Contract (PSC). “We have told (RIL) that the audit will be under Section 1.9 of the PSC,” Chaturvedi said. Section 1.9 provides for audit of charges and credits by a government auditor.

BP in a statement on July 18 stated that it had attended a joint meeting convened by the ministry on July 13 but refuted reports of a potential KG-D6 production shut-in.

RIL holds geological uncertainties as well as high water and sand ingress in wells for the fall in production and had at the beginning of the current fiscal projected an output of 27.6 mmscmd for 2012-13. This, as per its own projections, was to further dip to 22.6 mmscmd in 2013-14 and then to 20.4 mmscmd.

PTI