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RIL to relinquish 2 gas finds, carry out DST on 3 others

Tuesday, June 30, 2015, 23:56
This news item was posted in Business category and has 0 Comments so far.

NEW DELHI: Reliance Industries has decided to relinquish two discoveries and carry out the controversial Drill Stem Test (DST) at three discoveries to confirm the viability of gas reserves following a cabinet decision that offered a way out of the logjam between the operators and the regulator, industry executives familiar with the matter said. The government had offered Reliance Industries and staterun Oil and Natural Gas Corporation (ONGC) the option to relinquish the block, conduct DST or develop the discovery without conducting DST in a ring-fenced manner. A disagreement between the Directorate General of Hydrocarbons and the operators on the utility of DST for confirming the potential of reserves had held back development of associated gas reserves of about 90 billion cubic metres worth Rs 1 lakh crore. The operators had to confirm the option they planned to take by June 29, failing which the discoveries could have been deemed relinquished. Reliance Industries and its partners BP and Niko have informed the government that they would relinquish discoveries D-40 in NEC-25 block off the Odisha coast and D-31 in KG D6 block, executives said. The operator will, however, conduct DST on discoveries D-32 in NEC-25 block and D-29 and D-30 in KG D6 block. The contractor will undertake DST in one of the drilled appraisal wells related to the discoveries and separately submit budget estimates for DST. RIL did not inform the government of its stand on its sixth discovery, D-42 in KG D6 block, which may therefore be automatically relinquished. The development in these discoveries was held up as contractors refused to undertake the DST prescribed by the regulator to confirm the commercial viability of the reserves, calling the test archaic and expensive. Under the new policy, the operators will be able to recover just half the cost incurred on the DST.Carity on the DST issue has brought in certainty in the exploration sector and accelerated the development plans for the oil and gas explorers. In the past few years, Indian oil and gas exploration sector has become a battleground of conflicting interests and legal tangles.

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