The Hindu Business Line : Ministry for independent consultant for RIL’s D6 block

The Petroleum Ministry has expressed reservations on the proposal to appoint the Calgary-based D&M to evaluate the field development plan (FDP) of Reliance Industries Ltd (RIL) prolific Krishna Godavari Basin block.

The Ministry has asked the Directorate General of Hydrocarbons (DGH) to scout for another independent consultant. The DGH had recommended the name of D&M to carry out the evaluation. However, the Ministry has reservations on the proposed name, as it felt that there could be a conflict of interest, since D&M has earlier done some work for RIL’s D6 block, sources said. The company has appointed D&M for third-party audit of every well it drills.

Conflict of interest

Noting this, the Ministry has now asked the DGH to appoint another consultant that has no conflict of interest with the operator sources said adding that the DGH has been asked to take immediate steps.

Sources told Business Line that concerns have been expressed regarding approval given by the management committee of the block under the production sharing contract (PSC) to increase the estimated capital expenditure from $2.4 billi on to $8.2 billion for the KG D6 development project.

To eliminate all concerns, the Ministry had asked the DGH to appoint an independent consultant to assess the hydrocarbon reserves and FDP of RIL’s block. Concerns were expressed that the development cost was very high and that it would impact the Government’s share of profit. RIL’s revised FDP has its management committee approval.

Reliance aims to produce 80 million cubic metres per day (mcmd) from D-1 and D-3. It planned to produce less than 40 mcmd gas in June 2008 and raise it to a peak output of 80 mcmd in the next five months. This block was awarded to the consortium of RIL (90 per cent) and Niko (10 per cent) under NELP I round of bidding.

Related Stories:
Reliance gets approval for oil production in K-G basin
D6 gas block: RIL says it has permission to retain entire area

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