New gas pricing policy will apply uniformly to all: Veerappa Moily

Oil Minister M Veerappa Moily has clarified that the new gas pricing policy will apply uniformly to all, amid talks of Reliance Industries (RIL) being denied a higher price for gas due to output from KG-D6 not matching targets.

"There are no grey areas. The policy which we have adopted (based) on the recommendation of the Rangarajan Committee will be applicable to everyone," the minister told reporters on sidelines of the Global HSE Conference organised by Cairn India in the national capital on Thursday.

Asked if the new price of about $8.4 per million British thermal unit (mBtu) will not apply to RIL's currently producing D1&D3 fields that have produced much less than target, he said, "Don't ask (me that). When I said (price will apply uniformly) did I qualify."

Pressed further if the pricing of gas based on the average of rates at international hubs and actual cost of imported LNG would apply to all domestic producers uniformly, Moily said: "Yes".

The oil ministry is mulling applying the current rate of $4.2 per mBtu for gas produced from Dhirubhai-1 and 3 (D1&D3) fields even after expiry of the current term on March 31, 2014.

The Director General of Hydrocarbons believes output from D1&D3 fell to 10 million standard cubic metres per day (mscmd) from 53-54 mscmd achieved in March 2010 because RIL did not drill its committed number of wells. More wells, it believes, would increase output.

RIL, on the other hand, blames unforeseen geological complexities for the fall in output and believes the reserves in D1&D3 are actually less than one-third of 10.03 Trillion cubic feet predicted two years before the field began output in April 2009.

The oil ministry wants to find who is right and till then it is mulling if the new price should not apply to D1&D3 fields.

The new rates would, however, apply to the currently producing MA oil and gas field in the same block as well as new fields that come into production in coming years.

Moily said he had met officials of RIL and its partner BP Plc last year for three-and-half hours. "That demonstrated the will of the government to sort out issues."

The issues pertained mostly to the debate over the reasons for fall in production. "I am hopeful of results (coming out of the discussions)," Moily said.

With inputs from PTI