KGBasin

Two judges of a three-member bench delivered separate verdicts on the ongoing Ambani gas row between Mukesh Ambani’s Reliance Industries and younger brother Anil’s Reliance Natural Resources. The case involves terms of a deal under which Reliance Industries was to supply Anil Ambani’s Reliance Natural with 28 million standard cubic metres a day (mmscmd) of gas for 17 years at a rate below the government price.

Reliance Industries CMD, Mukesh Ambani had argued the private deal cannot take precedence over government policy, which determines who can receive gas and at what price.

RNRL’s Anil Ambani, who claimed otherwise, rolled out a series of front-page advertisements in major newspapers accusing the government of taking the side of Reliance Industries.

Agreeing with RIL’s argument, the Chief Justice of India issued a final verdict that said a memorandum of understanding between the two brothers signed in 2005 is not binding on RIL, a government contract over-rides all private agreements. SC has asked both brothers to sit down and re-negotiate the gas supply master agreement (GSMA) and then come back to the Court in 6 weeks. The verdict further said that gas is a national asset and belongs to the government till delivered to the consumer. The court said it will give its direction in 8 weeks.

The verdict means that the re-negotiation has to take place within the ambit of the government’s policy. Further the judgement adds that the government regulation must dictate the renegotiation plan and RIL and RNRL should renegotiate under government rules.

Minutes after the Supreme Court declared the verdict in favour of RIL, in the Ambani Gas Row, Oil Minister Murli Deora welcomed the move and called it a vindication of the Govt’s stand. “The Govt is satisfied with the verdict. The Govt has the power to decide the price of gas and the power to allocate.”

Oil Secy S Sundareshan added, “Right from the beginning, the Ministry has been saying that gas is the property of the nation, and we believe the court has upheld the terms of the Production Sharing Contract.”

“Now there is complete clarity on gas policy and the decision of the Bombay High Court has been quashed. We will continue to regulate gas pricing and policy in future.” However, he also said that he was unaware of what has to be renegotiated in the case.

Source:http://reliance-news.blogspot.com/2010/05/ambani-gas-row-government-emerges.html

There is no doubt about the fact that the Krishna-Godavari basin (KG basin) is hydrocarbon-fertile. Since only about 1/3rd of the total potential for exploration wells has been drilled so far, the basin certainly holds far more gas in its womb than has been discovered so far.

In September 2009, the Directorate General of Hydrocarbons (DGH) said that the gas output from only the fields managed Reliance Industries Ltd. (RIL) could be almost 4 times the levels committed by the company so far.

Currently, RIL has committed 80 million metric standard cubic metres per day (mmscmd) and its current production level is about 36 mmscmd. Hence, if the DGH’s calculations are accurate, RIL’s output would be about 300 mmscmd – almost quadruple!

The famous KG-DWN-98/l (KG-D6) block, where Reliance Industries Ltd. (RIL) made the world’s largest gas discovery in 2005, spans 8,100 sq. kms. of the Krishna-Godavari basin (KG basin). It lies in the Bay of Bengal on India’s east coast.

The first three discoveries (Dhirubhai-1, Dhirubhai-2 and Dhirubhai-3) have expected gas reserves of 8 tcf.

In March 2003, the exploration team discovered Dhirubhai-4, with in-place gas volumes of 1,700 bn standard cubic feet.

In February 2006, RIL encountered the thickest hydrocarbon column so far in its MA-2 well. This column reached a depth of about 3.6 km and penetrated a gross hydrocarbon column of 194m consisting of 170 m of gas and 24 m of oil.

Initial rate of production from the MA field is about 5,000 barrels per day (bpd) and is expected to reach its peak rate of 40,000 bpd by about mid-2010. D1 and D3 are expected to reach 2.8 bcfd within the first year of operation, although there is flexibility to raise this to 4.2bcfd.