RIL warns of KG-D6 shutdown, govt shows CAG’s red card

The tussle b/w Reliance Industries and the petroleum ministry over the future of India’s significant gas acreage reached to a full blown confrontation. Reliance and its partner BP have indicated the shutdown of the country’s biggest gas discovery- KG-D6 in 2015 if the government did not approve its long-pending investment proposals and revised capital expenditure plans.

Petroleum Ministery promised fast clearance but said the Comptroller and Auditor General (CAG) had suggested withholding of sanction to the work programme if it was denied access to RIL and BP’s accounts.

Gas output from the basin has been under pressure for more than a year. Both RIL and BP attributed the sharp decline in the output to the delay in approval by the ministry. The fall in the gas output has cut down power generation and industrial production in the country. Both companies told the government output would continue to decline if corrective measures were not incorporated. Usually, before the start of the year, oil-ministry controlled Oversight Committee approves the spending. However, in case of KG-D6, budgets and work programmes for 2010-11, 2011-12 and 2012-13 have not yet been approved.

Not only this, the management committee (MC) has also not approved the revised field development plan for the MA oilfield in the same Krishna Godavari basin KG-DWN-98/3 or the KG-D6 block in the Bay of Bengal. Besides, MC has denied to recognize at least 3 gas discoveries in the block, encumbering preparation of a field development plan to bring them to production.

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