The government has disallowed $1 billion expense on Reliance Industries (RIL) operated KG-D6 gasfields in Andhra Pradesh for not implementing the approved field development plan, parliament was told Tuesday.
"The average gas production from KG-DWN-98/3 (KG-D6 block) during the current year was about 29.81 million standard cubic metres per day as against 86.73 mmscmd approved in the field development plans for D1, D3 and MA fields in this block, which are currently on production," Oil Minister M. Veerappa Moily told the Rajya Sabha in a written statement.
The output has fallen from a peak of 62 mmscmd in August 2010, because one-third of the wells in D1 and D3 gasfields and in the MA oil and gasfield have stopped to produce owing to water loading and sand ingress in well bores, said Moily.
RIL has not drilled the required number of gas producer wells in D1 and D3 fields. It has drilled only 22 wells, of which only 18 have been put on production.
The company was to drill a total of 31 wells as per the approved field development plan.
"Government has not accepted the contention of the contractor (RIL) and have ordered proportionate disallowance of cost of production facilities amounting to $1.005 billion for not fully implementing approved development plan," Moily said.
The oil minister said D1 and D3 fields were to produce 80 mmscmd in the current fiscal. Against this, they averaged 23.94 mmscmd in the period up to October.
"As a result, as against the projected cumulative gas production of 0.605 trillion cubic feet from D1 and D3 fields from April 1, 2012 to Oct 31, 2012, the actual cumulative gas production was 0.181 Tcf for the same period," Moily said.
He quoted RIL as saying that any additional wells in D1 and D3 fields may not help improve either production rate or recovery going by reservoir behaviour.