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Reliance D-6 Mela: Need for specific commitments backed by performance guarantee!

It is just not fair to exert all the pressure on Reliance alone. What about the rest of the gas producers such as ONGC, GSPC, and Cairn?

Once again, the public are being fed with information relating to the complex technical jargon for non-delivery of promised gas from Reliance Industries Ltd (RIL). To be fair to Reliance, what they claim to be a "geographical surprise" may be 100% true! Yet, this does not absolve them of their promise to deliver the gas. When the gas production began to fall, why did Reliance not start looking for gas in other areas in the block? Why did Reliance not drill other wells in different areas that were showing promise? If they had carried out these activities, then, we would have some compassion for them in feeling that they did "try" to locate new wells, but failed in the process!

 

Now, the government through its various ministries and committees are toying with the idea of dual prices for gas, though the Gas Pricing Guidelines of the Centre promotes only uniform pricing for all gas resources in the country.

 

Either we accept the Reliance claim or have it verified by an independent, qualified and internationally reputed consultant. If nature has played against us, Reliance has become the scapegoat in the process?

 

From April 2014, the gas supplies in the country will be uniformly charged $8.4/mmBtu as against $4.2/mmBtu as at present. A demand has been made that the quantities committed by Reliance at the old price of $4.2/mmBtu should be effectively used for that quantity of gas not supplied against the old contract, and only when that is completed, the new rate of $8.4/mmBtu should be applied.

 

In the meantime, the government has already imposed a penalty on Reliance.

 

The issues relating to (a) non-supply of previous contract at the old and

agreed price of $4.2/mmBtu (b) compensation to be paid to buyers who have running contracts with Reliance, or pay replacement costs, if they had to secure their needs from other sources (c) Reliance’s willingness to adjust the price differential in future supplies or mutually acceptable terms etc., should be dealt separately.

 

The government has already made their quantum of penalty known, which Reliance has to pay. But, Reliance, in order to move on with their business, needs to:  

# identify the new sources they have tapped and their "estimated" potential

# when such gas will be made available

# identify the new areas of potential where they are prospecting in the block and how many wells they expect to drill this year and the next

 

Finally, it is just not fair to exert all the pressure on Reliance alone. What about rest of the gas producers such as ONGC, GSPC, and Cairn? They need to come forward with their projections and let the public know the prospects for gas deliveries from their wells? All the oil and gas prospectors need to have a firm annual commitment in terms of how many wells they expect to drill in their allocated blocks, and have to constantly report back to the Ministry of Petroleum and advise their findings. 

 

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also 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.)

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COMMENTS

Himanshu Gandhi

4 years ago

It is nothing but to pressurize Reliance to give more political contribution to the present government, as election is approaching near

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