Reliance fined $579 million for producing less gas than targeted from KG basin
New Delhi: The Union government has slapped an additional penalty of $579 million on Reliance Industries for producing less than targeted natural gas from its KG-D6 block, oil minister Dharmendra Pradhan said.
With this, the total penalty on RIL for missing the target in four fiscal years beginning April 1, 2010 now stands at a cumulative $2.376 billion, the minister informed. The penalty is in the form of disallowing costs incur-red.
The Production Sharing Contract (PSC) allows RIL and its partners and Niko Resources to deduct all capital and operating expenses from the sale of gas before sharing profit with the government.
Disallowing costs will result in government’s profit share rising by $195 million from 2010-11 to 2013-14, he said.
Mr Pradhan said gas output from the Dhirubhai-1 and 3 gas field in the eastern offshore KG-D6 block was supposed to be 80 million metric standard cubic meter per day (mmscmd), but actual production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14.
This year the output has been only 8.05 mmscmd. His oil ministry on July 10 issued a notice disallowing $579 million in cost for output lagging targets in 2013-14.
The government had previously issued a notice to RIL disallowing a total of $1.797 billion in costs for falling short of production during 2010-11 ($457 million), 2011-12 ($548 million) and 2012-13 ($792 million).
