Five days after Reliance invoked arbitration against the Indian government, upstream regulator Directorate General of Hydrocarbons (DGH) has proposed a formula to restrict RIL's cost recovery at the KG-D6, reports CNBC-TV18's Nayantara Rai.
As per this formula, RIL maybe disallowed to recover USD 1.2 billion in FY12 and FY13.
The oil minister recently said that RIL has not adhered to its side of the production sharing contract, but at the same time, he also said that any changes to the contract is a metter to be discussed in detail.
The DGH has now suggested that the new formula be used every year to calculate the cost that RIL should be disallowed from recovering.
RIL commenced gas production from the KG-D6 field, which had a reserve potential of 11.3 trillion cubic feet, in April 2009 and had promised to ramp-up production to 80 mmscmd (million standard cubic metres per day) by April 2012. It had proposed a capex of USD 8.5 billion to drill and bring to production, a total of 31 wells, which included a major milestone of 60 mmscmd by 2010. However, it could reach a high of 54 mmscmd in 2010 after which production started tapering and is currently at 34 mmscmd.
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