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DGH recommends additional penalty of $792 million on RIL

08 Aug 2013 Evaluate

Oil regulator Directorate General of Hydrocarbons (DGH) has recommended an additional penalty of $792 million on Reliance Industries (RIL) for producing less than the projected natural gas from its eastern offshore KG-D6 fields. However, the Oil Ministry is yet to act on the advice of DGH as the previous cost recovery disallowance notice is under arbitration.

The regulator had in last month recommended to the Oil Ministry that cost of $792 million that RIL has incurred in KG-D6 fields, be disallowed for producing only an average of 26.07 million cubic meters per day of gas as against the target of 86.73 mmcmd in 2012-13. This will be additional to $1.005 billion cost recovery already disallowed for output falling short of targets during 2010-11 and 2011-12.

Mukesh Ambani owned company has built infrastructure to handle 80 mmscmd of output but is currently producing less than 14 mmscmd. The company has been blamed of not drilling committed quota of wells leading to fall in production, resulting in a large chunk of production facilities lying unused or under-utilised.

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