RIL produced 2 tcf of gas out of the originally certified reserves of 10.03 tcf
Oil secretary GC Chaturvedi was quoted by Russia’s Interfax saying that RIL had “over-sold its position without being absolutely sure about it” and that “it is unfair for shareholders and the country at large”
Reliance Industries (RIL) today refuted suggestions that it may have inflated KG-D6 gas reserves, saying they were certified by leading independent international certifiers and KG fields are facing problems similar to those confronting ONGC's Imperial Energy.
The D1&D3 fields in KG-D6 block were originally certified to hold 10.03 trillion cubic feet (tcf) of proved plus probable (2P) reserves, of which about 2 tcf have already been produced in last three years.
"The exploration business is fraught with uncertainty and geological surprises are not unknown in the industry. Both DGH and the oil ministry have enough professionals with sufficient technical knowledge and experience of oil and gas industry to appreciate this," a RIL official said.
With reservoir complexities hitting output, the firm's junior partner, Canadian Niko Resources, which had a few years back given a prognosis of KG-D6 holding over 50 tcf of reserves, last week said the remaining 2P reserves may be only 1.93 tcf. These do not include the reserves 16 satellite fields may hold.
Meanwhile, Niko late on Wednesday posted a fourth quarter net loss of $183.3 million, or $3.55 per share, compared with net profit of $6.2 million, or 12 cents per share, a year earlier. The Canadian company attributed the decline in performance to the fall in output from the KG-D6 blocks on India's eastern coast.
Though oil secretary GC Chaturvedi has steadfastly refused to comment on KG-D6 reserves downgrade, Russia's Interfax quoted him saying that RIL had "over-sold its position without being absolutely sure about it" and that "it is unfair for shareholders and the country at large".
While Mr Chaturvedi couldn't be reached for comments despite repeated attempts, a ministry official said the secretary had not made any comments on KG-D6 reserves to anyone and the Interfax report was "imaginary and wrong".
The company has been criticized by the oil ministry for drilling fewer wells than planned. RIL has so far drilled 22 wells on Dhirubhai-1 and 3, two of the 18 gas finds in the KG-D6 block that have been brought to production, but only 18 were put on production. Of these 18, five have ceased because of water and sand ingress.
When contacted, a RIL official said KG-D6 gas reserves were independently certified by leading global consultants as well as by ministry's own technical arm, DGH.
"The ministry is well aware that KG-D6 reserves had been certified by the best international experts and had been verified by the Directorate General of Hydrocarbons," he said.
He said Mr Chaturvedi had used reserves being certified by international experts as a defence of output lagging targets at state-run Oil and Natural Gas Corporation's (ONGC) most expensive asset, Imperial Energy in Russia.
Imperial's Russian assets produced 15,400 barrels per day (bpd) of oil at end of last year, significantly less than projected 80,000 bpd output when ONGC Videsh acquired the firm for $2.1 billion.
The Comptroller and Auditor General of India (CAG) criticised ONGC in a report last year, and said the falling output resulted in a loss of Rs1,182.14 crore.
Gas output at KG-D6 fields almost halved to 31.33 million metric standard cubic meters per day (mmscmd) after reservoir pressure dropped unexpectedly and water and sand ingress was reported in wells.
RIL had in 2006 stated that output would rise to 80 mmscmd by 2012-13.
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