The Telegraph
Since 1st March, 1999
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Scanner on Reliance gas project

New Delhi, Oct. 26: The government has ordered a probe into the delay in the production of gas by Reliance Industries from the giant offshore field in the Krishna-Godavri basin. It may even impose a penalty if Reliance is found to have been deliberately holding back the gas.

Petroleum secretary S.C. Tripathi said the director-general of hydrocarbons had been asked to carry out the inquiry. He will ascertain whether the delay is on account of genuine problems or deliberately caused by the company to exploit the market situation.

Reliance had initially said the field would commence commercial production of gas in 2007. This was later deferred to June 2008. The government had asked the company to start production by January 2008 as NTPC needs the gas for power production.

Tripathi said the government would examine whether a penalty could be imposed for any delay beyond June 2008.

Reliance has informed the government that its production schedule has been hit due to non-availability of rigs. According to the Mukesh Ambani-controlled company, the demand for oil and gas has shot up in the international market and so has the demand for rigs. Therefore, it is difficult to source drilling rigs to develop the field.

Moreover, senior consultants are in great demand with oil companies the world over trying to step up the production of oil and gas. Reliance is facing a major problem in hiring consultants to draw up its development plans.

However, some allegations have been raised that the company may be holding back the production schedule so that NTPC makes alternative arrangements and it does not have to supply gas at a lower price as world prices have shot up since it started negotiations with ONGC.

The government also has a share in the gas field which has been discovered by Reliance. According to the production-sharing contract, the private company has to chalk out a time-bound action plan to start producing the gas.

The initial spadework in marking out the hydrocarbon-rich block was done by ONGC and the public sector oil company had wanted to retain the block for further exploration.

However, it was thrown open to private bidders much against ONGC’s wishes. ONGC now finds itself at the receiving end as the gas find is bigger than the discoveries it has made till date in the eastern offshore region.

GAIL has also taken on Reliance Industries on the proposed pipeline project to evacuate gas from the Krishna-Godavri basin. It has asked the petroleum ministry to review the permission granted to Reliance to lay the pipeline.

In its complaint to the ministry, GAIL says despite receiving a permission over a year ago to go ahead with the pipeline project from the eastern coast to Gujarat, Reliance has not started implementing the project at the ground level.

GAIL has also highlighted the grouse that while the ministry has always asked it to furnish proof of having firmed up the sale of 50 per cent of the gas proposed to be transported through its pipelines before clearing any project, this condition has not been imposed on Reliance.

A senior GAIL official told The Telegraph that the company had informed the petroleum ministry that since the Reliance deal with NTPC had not fructified so it did not meet the criterion of having tied up with a customer for the gas.

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