Parliament standing committee report indicts Mukesh Ambani firm for defaulted on gas production
The Union Ministry of Petroleum
and Natural Gas might terminate the contract granted to Mukesh
Ambani-owned Reliance Industries Limited (RIL) for drilling natural gas
from Krishna-Godavari basin in Bay of Bengal, according to the statement
issued by the ministry. Earlier, on Tuesday, a parliamentary standing
committee's report on pricing of petroleum and natural gas indicated
that RIL had defaulted on gas production from the region.
Natural gas is a relatively cleaner fuel when compared to coal used
in power generation or diesel used in vehicles. Reliance has a monopoly
over the country's gas fields.
Reacting to the contents of the report, oil and petroleum minister
Veerappa Moily said on Wednesday that default is only punishable by
termination of the contract. In its report, which had the expert view of
director-general of hydrocarbons (DGH), the parliamentary committee
stated: “The committee is of the opinion that non-adherence by the
contractor to approved field development plan should be construed as
'default' and not just failure and remedial action by the ministry must
be premised on 'default' by the contractor and not on 'failure'.”
Hoarding gas?
According to the office of DGH, which tabled a report earlier this
year, RIL had shut down 10 drilling wells till November 2013. While RIL
attributed the shortfall in production to sand and salt water ingress,
which led to low pressure during production, the ministry has said RIL
has not been producing and, thereby, hoarding gas. DGH's report shows
that output from D1 and D3 gas fields in the block fell sharply after
achieving about 62 million metric standard cubic metre (MMSCM) per day
about three years ago. The fields are currently producing only around 10
MMSCM per day of gas, which is far below the peak output of 80 MMSCM
per day. This is of significance and has to be seen in the context of
roughly 20,000 MW of power generation capacity lying idle in the country
for want of gas.
The gas field matter is under arbitration since May 2012, when the
ministry sent a notice to RIL, stopping any further expenditure till it
increases the production from the gas block.
