New Delhi, April 29: The government today approved a policy to allow the development of a dozen contentious natural gas discoveries of Reliance Industries and ONGC worth Rs 1 lakh crore.

The policy, approved by the Cabinet Committee on Economic Affairs, gives the companies an option to either develop the finds at their own risk or perform DGH-prescribed conformity tests before developing them and recoup costs. The policy will help to monetise 90 billion cubic metres of gas finds.

"This will settle the long pending issue with regards to 12 discoveries in five blocks pertaining to ONGC (six discoveries) and RIL (six discoveries) and also establish a clear policy for the future," an official statement said.

The 12 finds hold reserves "which would be valued at over Rs 1 lakh crore at the current gas price of $4.66 per million British thermal unit on gross calorific value", it said.

Testing the commercial viability of a discovery is an important step in the development of oil and gas fields.

RIL's discoveries were earlier rejected by the Directorate General of Hydrocarbons (DGH) as the company resisted carrying out a test known as the drill-stem test. DGH officials argued that the test was a must because it was more predictable and precise in estimating oil and gas reserves.

RIL and ONGC chose a modern and less expensive method known as the Modular Dynamic Test.

The CCEA allowed companies to either relinquish the blocks or develop the discoveries after conducting a DST. Cost recovery for carrying out DST would be capped at $15 million. Alternatively, the companies will be allowed to develop the discoveries without conducting DST or at their own cost.