Oil Ministry Permits RIL to Explore in Producing Fields

Oil Minister, M. Veerappa Moily, announced the major decision of giving a go – ahead to RIL (Reliance Industries Limited) for exploring oil and gas within its operational fields. Giving a green signal to the exploration, he stated that the government has made its mind to permit exploration in mining lease areas with the objective of finding potential investments that will help lower the imports.

According to some sources working with the development, the Oil Ministry had written to the Directorate General of Hydrocarbons, permitting them to carry forward with their further explorations in the present operational oil and gas fields. However, the permission was granted with the condition that it would cater to cost recovery of these wells only if the discovery was deemed to be a commercially exploitable one. Hence, the company will not be in a position to recover the cost involved in drilling unless the discovery turns out to a potent one and will ensure that the government does not have to endure any risks owing to these discoveries.

Until date, the scenario has been different wherein the discovery area is ring – fenced and a mining lease is offered for the production of hydrocarbons when the company reveals its find (oil or gas) in a particular area. Here, the operators were in a  better position with them being able to recover the cost borne, from the production and sale of the oil and gas in that particular block, regardless of the success or failure of the wells.

On the global front, it has been easier for oil and gas-producing companies with the government encouraging exploration, by permitting fields under production in order to amplify the resources and leverage the operational ones.

Reliance Industries intends to examine the nitty – gritty and nature of the reservoirs, by drilling exploration wells on D1 and D3 gas fields in its key block, KG-D6. The company has been for long waiting for this permit as it was necessitated for them to comprehend the problems on an immediate basis, taking into consideration the present backdrop. D1 and D3 gas fields are the largest among its 18 gas finds on the KG-D6 block. RIL, UK ‘s  BP Plc and Niko Resources  of Canada hold 60%, 30% and 10% interest  in this block, respectively.