Despite the huge decline in oil and gas capacities from RIL and delay in approving Cairn’s plan for Rajasthan, the government is wavering on its policies and relying more on imports
After hitting a peak production of 60 million metric standard cubic metres per day (mmscmd) by end of 2009, Reliance Industries’ (RIL) output has fallen down to 30 mmscmd, a steep fall of 50% from its Krishna Godavari (KG) D-6 block.
RIL is in a fix; literally between the devil and the deep sea. Due to the delay in government approval and uncertainty arising out of this, despite having spent over $6 billion in the pre-developmental activities on the D-6 block, the oil and gas exploration and production major is putting its exploration activities on the hold.
Presently the D1-D3 fields in the Krishna Godavari block are producing some 23 mmscmd while the MA fields are getting the balance of 5.8 mmscmd to make the up the current production.
As the uncertainty continues, RIL and its partners, BP and Niko are planning to submit a revised field development plan (FDP) for D-1 and D-3, aimed at maximising the gas recovery and bring about satellite discoveries in the block to increase the production.
Cairn India, on the other hand, is planning to spend $600 million to increase the output in its Rajasthan oil fields, which has crossed 100 million barrels so far, with a flow of 175,000 barrels a day.
Anil Agarwal, chairman of Vedanta Resources, has sought the intervention of prime minister Manmohan Singh, with a view to seeking the oil ministry’s permission to explore within the ring-fenced development area that contains 25 oil and gas finds. If and when given, Cairn will endeavour and increase the current output from 175,000 barrels a day to 300,000, reaching 15 million tonnes per year.
Although the Rajasthan production sharing contract and mining lease have provisions that permit carrying on exploration and development programme in the area, Mr Agarwal has stated that they have been asked to obtain government approval for the same. Such avoidable formalities only delay the work planned by the company.
It is essential that the government departments act as catalysts for development and production of oil and gas rather than act as stumbling blocks.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected]