The Reliance Industries ltd (RIl) has apparently decided to quit two gas discoveries, the D-40 in NEC-25 block and D-31 in KG D6 block off the Odisha coast, according to sources.
However, it has opted to conduct Drill Stem Test (DST), a test that establishes presence of gas in a block, in these two blocks.
The sources informed that the concerned block oversight panel approved project cost of $ 15 million for each DST, required as per the Government norms, at its meeting held last week.
In April this year, the Cabinet Committee on Economic Affairs (CCEA) had approved a policy to allow operators to develop a dozen of natural gas discoveries worth about Rs 1 lakh crore at current prices.
The new policy gives companies the option to either develop the finds at their own risk or conduct conformity tests prescribed by the Director General of Hydrocarbons (DGH).
The CCEA policy has settled a long pending issue with regard to 12 discoveries in five blocks that hold reserves of around 90 bcm of gas. While RIl is carrying out discoveries in six of these blocks, the Oil and Natural Gas Corporation (ONGC) is carrying out the discovery in the rest ones.
The CCEA allowed companies to either relinquish the blocks or develop them after conducting DST with 50 per cent cost of DST imposed as penalty in the event of the company not conducting the test on time.
The companies were also allowed to develop the discoveries without conducting tests at their own cost. The expenditure incurred in developing these blocks is supposed to be recouped only if the fields are commercially viable.
The RIl has so far made19 gas and an oil discovery in the KG-D6 block. Of these, two gas discoveries started production in April 2009 and the oil find in September 2008.
Out of a total area of 7,645 square kilometres in the KG-D6 block in the Bay of Bengal, the Government had last year allowed the RIl and its partners BP Plc of UK and Canada’s Niko Resources to retain only 1,4462.12 sq km area where regulator DGH-recognised discoveries have been made.