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No change in PSC with RIL: Reddy
Petroleum Minister S Jaipal Reddy has said that there would not be any change in the existing production sharing contract with Reliance Industries Ltd (RIL) with reference to its Krishna Godavari Basin D6 block (KG D6 block).
“There would be no change in the production sharing contract (with Reliance). If there are changes, these would be it will be introduced in the tenth edition of oil and gas auction rounds and will be prospective,” Reddy said on the sidelines of an industry meet.
The ministry had been contemplating action against RIL for an acute pressure drop and water ingress that has brought down output from the Dhirubhai-1 and 3 gas fields in the KG-D6 block to about 34 million cubic metres per day, compared to the 61.88 mmcmd target, by limiting the amount of expenditure it is allowed to recoup.
However Reddy’s statement now indicates Government’s softening of stand towards RIL from its earlier position when it had indicated that it could make changes in the production sharing contract, if need be, for taking action against the Mukesh Ambani-led company.
The New Exploration Licensing Policy (NELP), under which RIL had won the KG-D6 block in the first bid round in 2000, allows operators to recover 100 per cent of their expenditure on exploration and production before sharing profits with the Government.
It does not link cost-recovery to output, but the ministry wants to restrict this in proportion to gas production vis-a-vis the target.
Oil Secretary GC Chaturvedi had on November 22 stated that the Government will not “hesitate to even change the PSC if required” to implement the move to restrict cost-recovery.
Two days after that statement, RIL slapped an arbitration notice on the Government, saying the move was illegal and against the PSC.
Chaturvedi on Friday said ministry is referring the arbitration notice to the Law Ministry for advice before taking the necessary action, like appointment of an arbitrator.
“The move of RIL for arbitration is under our consideration,” Reddy said. “There is a provision in the PSC for arbitration in case of a dispute. Therefore, I see no problem in this. However, we need to consult and seek advise from others.”
The Minister said his attempt would be to expedite the entire process.
Petroleum Minister S Jaipal Reddy has said that there would not be any change in the existing production sharing contract with Reliance Industries Ltd (RIL) with reference to its Krishna Godavari Basin D6 block (KG D6 block).
“There would be no change in the production sharing contract (with Reliance). If there are changes, these would be it will be introduced in the tenth edition of oil and gas auction rounds and will be prospective,” Reddy said on the sidelines of an industry meet.
The ministry had been contemplating action against RIL for an acute pressure drop and water ingress that has brought down output from the Dhirubhai-1 and 3 gas fields in the KG-D6 block to about 34 million cubic metres per day, compared to the 61.88 mmcmd target, by limiting the amount of expenditure it is allowed to recoup.
However Reddy’s statement now indicates Government’s softening of stand towards RIL from its earlier position when it had indicated that it could make changes in the production sharing contract, if need be, for taking action against the Mukesh Ambani-led company.
The New Exploration Licensing Policy (NELP), under which RIL had won the KG-D6 block in the first bid round in 2000, allows operators to recover 100 per cent of their expenditure on exploration and production before sharing profits with the Government.
It does not link cost-recovery to output, but the ministry wants to restrict this in proportion to gas production vis-a-vis the target.
Oil Secretary GC Chaturvedi had on November 22 stated that the Government will not “hesitate to even change the PSC if required” to implement the move to restrict cost-recovery.
Two days after that statement, RIL slapped an arbitration notice on the Government, saying the move was illegal and against the PSC.
Chaturvedi on Friday said ministry is referring the arbitration notice to the Law Ministry for advice before taking the necessary action, like appointment of an arbitrator.
“The move of RIL for arbitration is under our consideration,” Reddy said. “There is a provision in the PSC for arbitration in case of a dispute. Therefore, I see no problem in this. However, we need to consult and seek advise from others.”
The Minister said his attempt would be to expedite the entire process.
