New Delhi, Aug. 22 (PTI): The oil ministry may soon approach the cabinet with a response to a finance ministry suggestion that Reliance Industries be asked to sell gas it has failed to deliver at the old price.
Within days of the cabinet approving a gas pricing formula that is expected to raise rates from April 2014, the finance ministry asked the oil ministry to “examine for appropriate action” suggestions made in the media.
These were putting a cap up to which rates can be raised and forcing RIL to sell the quantity it had committed but failed to deliver in the past three years at the old rate.
Sources said the oil ministry was examining the issue and would decide on the next course of action in a few days.
One option is to approach the cabinet with a status report. The ministry, sources said, may compile all the facts and inputs and present them to the cabinet for a decision.
The Directorate General of Hydrocarbons (DGH) has already cited practical difficulties in implementing the finance ministry’s suggestions.
The DGH on August 1 wrote to the ministry, saying production estimates, outlined when investment plans are approved much before a field is put to production, vary vastly with subsequent targets approved annually by an oversight panel headed by the DGH.
“In most cases, the projected production in the field development plan and in the annual work programme would not be identical. This is because of the dynamic nature of exploration and production activities, which need to be adapted to suit the ground realities and operational requirements,” it wrote.
Gas output at RIL’s KG-D6 touched a peak of 69.43 million standard cubic meters per day in March 2010 before unanticipated water and sand ingress shut wells, leading to output lagging estimates set in 2006.