Management Committee to meet on declining gas output from KG basin

Worried by the continued decline in the output of gas from the KG-D6 fields of Reliance Industries Limited (RIL), the Petroleum and Natural Gas Ministry has convened an urgent meeting next week to review the situation in light of the failure of RIL to meet its production targets.The decision to convene the meeting comes close on the heels of the decision of the Directorate General of Hydrocarbons to despatch a team to assess and probe the decline of gas production from the Kg basin fields and give a ``correct’’ feedback on the issue. The Petroleum Ministry has already asked RIL to stop supply of gas to non-core sectors. 

"The meeting of the Management Committee has been convened for next week to asses the situation and find out reasons for RIL to fulfil its commitments on product of gas from KG basin fields,’’ Petroleum Secretary, S. Sundareshan told reporters here."A formal meeting has been called next week in which representatives of the Petroleum Ministry, the Directorate General of Hydrocarbons and the contractor RIL will be present,’’ he said. The Petroleum ministry has come under scrutiny for its failure deal with the issue in an effective manner and to decisively act against the contractor for not meeting the obligations on the production of gas issue.

"After ascertaining the reasons, we will take appropriate measures. These are fields which have come into production after monumental effort. We do not come to abrupt judgements on such matters,’’ the Petroleum Secretary said when asked if the Government was contemplating levying any penalty. However, he did not elaborate on the measures that are likely to be taken in this case.

Officials in the Ministry said the Production Sharing Contract (PSC) does not provide for levying of any financial penalty on a firm not meeting its drilling commitment during production stage. The PSC provides for levy of liquidated damages only in case a company does not meet the commitment it had made for getting the block. Penalty is levied for the part of the minimum work programme (MWP), committed at the time of bidding for the block, that is not completed. 

Mr. Sundareshan said RIL had been asked to immediately stop natural gas sales to Essar Steel, Welspsun Maxteel, Ispat Industries and petrochemical and refineries so that full demand of core sectors of fertiliser and power is met. "There is no question of any contractor not abiding by government instructions. RIL would abide by the ministry orders within days. Of the 57.17 mmscmd of gas for which contracts have been signed, 9.57 mmscmd has been cornered by steel, petrochemical and refineries sector.

He said government had initially allocated 40 mmscmd of gas only to fertiliser, power, LPG extraction units and city gas distribution firms. When output went up, additional users in steel, refineries and petrochemical sector were added. "Now when the output has fallen to around 50 mmscmd, it is natural for the government to go back to allocation made to the priority sector,’’ he added. 

Courtesy : The Hindu