News Detail

• Reliance Industries (RIL) has told the government that already declining production at its trophy asset, the D6 block in offshore Andhra Pradesh, could plummet drastically if its investment plans are not approved forthwith. Senior RIL officials led by Chairman Mukesh Ambani have met Prime Minister Manmohan Singh and Finance Minister Pranab Mukherjee over the past few weeks and told them the fate of India's largest hydrocarbon find since the Bombay High discovery of the mid-70s was in peril, people familiar with the matter said. "The company needs to begin work as of yesterday if it has to arrest the decline and take advantage of the weather window," one of them, a top RIL official, told ET, adding that it wanted the approvals latest by December 31.
• RIL had earlier pressed for the approvals to be in place by November 15, one of the persons said. The block, which is located in the offshore Krishna Godavari basin, is only accessible for 5-6 months in a year because the area is vulnerable to cyclones. The official declined to be identified because of the sensitivity of the discussions and because it concerned the senior-most political leaders. RIL has been awaiting approval for its capital spending - referred to as a work programme - as well as changes to the production sharing contract (PSC) to reflect the entry of British Petroleum, or BP, as a strategic partner. The PSC lays down norms governing the relationship between oil explorers and the government.
• The world's secondlargest oil major (excluding national oil companies) bought a 30% stake in 28 oil and gas fields, including the D6 block, in February 2011. The government is yet to allow a representative from BP to join the management committee that includes representatives from the operators, the government and the regulator, the Directorate General of Hydrocarbons, two persons close to the development said. The Cabinet approved the deal in July this year. The management committee will meet on Friday, bringing RIL and government representatives face-to-face for the first time after the oil-to-telecom major filed for arbitration against the government, which was said to be mulling the possibility of restricting RIL's ability to recover its investments in the D6 field.
• RIL's discovery of gas in the D6 block was the largest find in the world in 2002. The company began production in 2009, producing 40-65 million units till late 2010. India's largest private sector company had projected gas production would increase to 80 million metric standard cubic metres over two years. Instead, production from the block began declining from January 2011, leaving customers such as power plants and fertiliser units stranded and damaging the company's reputation for flawless execution. The changes in the reservoir's behaviour, brought about by geological factors, caught RIL by surprise, and have resulted in a sharp decline in revenues and intense regulatory scrutiny. The failure to produce the projected volume forced RIL to turn to BP, known for its expertise in deepwater exploration.

Source