Reliance, Partners Relinquish Gas Block Offshore East India

Reliance Industries (RIL) and partners Hardy Oil and Gas and BP have relinquished KG-DWN-2003/1 (D3) gas exploration licence off the coast of east India, Hardy announced Wednesday.

“On 23 December 2014, the D3 Management Committee considered a proposal from Reliance Industries Limited, the operator of the D3 block, in which the company holds a 10 per cent interest, for the relinquishment of the block. The proposal set out that as per the Government of India (GOI) Notification O-22013/27/2012-ONG-D-V dated 10 November 2014, access restrictions have been imposed by the GOI and the Operator recommended the relinquishment of the block with immediate effect under clause 3.1 (a), and (e) and 3.2, of the referenced Government Policy,” Hardy said.

Hardy holds 10 percent stake in the block, RIL owns 60 percent interest and BP has the remaining 30 percent stake.

The previously announced access restrictions imposed by the Ministry of Defence (MOD) rule out any further exploration/development activities in the impact zone area and inhibited the Contractor from undertaking any further work and investment in the unrestricted area of the Block due to the anticipated increase in cost and risk, the company added.

“This untenable position was further compounded by the uncertainty of long-term natural gas pricing in India following the GOI policy announced earlier in the year which imposed pricing at a significant discount to our expectation of regional market pricing,” Hardy stated.

Indian government in October announced a 33 per cent hike in natural gas price to $5.61 per million British Thermal Unit, much lower than $8.4 rate that the industry was expecting.