New Delhi: The oil ministry is moving the Cabinet to allow Reliance Industries to retain three gas discoveries worth $1.45 billion in the eastern offshore KG-D6 block even after expiry of timelines.
Upstream regulator directorate general of hydrocarbon (DGH) had sought taking away the three finds from RIL as the company had failed to prove their commerciality by not conducting prescribed tests.
The oil ministry is, however, seeking relaxation of the rules for RIL as it feels rebidding the finds may lead to delay in development of the discoveries, which hold 345 billion cubic feet of recoverable gas reserves, sources privy to the development said.
Also, it feels RIL may go to arbitration which may lead to further delay in production and extra cost associated with the arbitration.
The three finds, which can be quickly put on production by RIL using existing infrastructure of currently producing gas fields as well as those being developed, are worth USD 1.45 billion at current gas price of USD 4.2 per million British thermal unit.
Sources said the ministry is likely to seek approval of the Election Commission before floating a draft note for inter-ministerial consultations.
After comments are received from the finance and law ministries besides the planning commission, it will be put to the Cabinet Committee on Economic Affairs (CCEA) for approval.
Sources said RIL will have to conduct DGH prescribed Drill-Stem Test (DST) on D29, 30 and 31 discoveries and only half of the USD 93 million will be allowed to be cost recovered.