India Imposes $579 Mn Additional Penalty on Reliance for Missing KG D6 Gas Output Target

The Indian government has imposed additional penalty of $579 million on Reliance Industries (RIL) for producing less than targeted natural gas from its KG-D6 block, Oil Minister Dharmendra Pradhan said on Monday, reports Press Trust of India.

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, Pradhan informed the lower house of the parliament.

The penalty is in the form of disallowing costs incurred, says Press Trust. The Production Sharing Contract (PSC) allows RIL and its partners BP Plc 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, the minister said.

In a written reply to a question, 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 standard cubic meters per day but actual production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14, reports Press Trust.