RIL’s KG-D6 gas output falls, costs disallowed: Pradhan

New Delhi, March 20 (IANS) Further fall in natural gas output from Reliance Industries' (RIL) KG basin D6 block in the eastern offshore has forced the government to disallow the operators $2.756 billion in costs, Parliament was informed on Monday.

The Mukesh Ambani-led RIL and its consortium partners produced less than 16 per cent of the 31,793.28 million standard cubic metres (mmscm) of gas target from KG-DWN-98/3, or KG-D6, block in the Bay of Bengal in 2013-14, Petroleum Minister Dharmendra Pradhan told the Lok Sabha in a written reply.

Thereafter, in 2014-15, output fell to 13.75 per cent of the targeted 32,458.72 mmscm to 4,461.91 mmscm, and to 12.24 per cent of the target in the following year at 3,939.97 mmscm.

"The gas production from D1 and D3 fields in this (KG-D6) block is much less than the production rates approved in addendum to Initial Development Plan (AIDP)," Pradhan said.

"The Contractor had set up production facilities to produce gas to a maximum level of 80 million standard cubic meters per day (mmscmd), but has failed to adhere to approved Field Development Plan in terms of drilling and putting on stream the required number of wells and consequent achievements of projected gas production profile in AIDP," he said.

"This has led to under-utilisation of facilities and surplus inventories. Ministry of Petroleum and Natural Gas has disallowed an amount of $2.756 billion from the cumulative development cost incurred by the Contractor as on 31st March 2015, based on the cumulative shortfall in production of gas vis-a-vis production estimates," he added.

Pradhan said the additional provisional profit petroleum payable to the government by RIL for the period up to fiscal 2014-15 is approximately $246.9 million.

RIL has invoked arbitration under the Production Sharing Contract (PSC) against the ministry's disallowance order.

In the current fiscal, the RIL consortium has produced 2,641.67 mmscm of gas till February as against the target of 29,316.69 mmscm, which amounts to an achievement of 9 per cent, Pradhan added.

The minister also said the state government-run Gujarat State Petroleum Corp (GPSC) too has produced much less than targeted in the three years in question but no penalty has been levied on the Gujarat state enterprise.