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Government rejects RIL’s claims of six D6 blocks
The government has refused to recognize Reliance Industries’ (RIL) six discoveries
in its D-6 block claiming that the required tests were not conducted through
prescribed coventional tests. The production sharing contract (PSC) requires the
operator (RIL) of the block to conduct costly, conventional tests to check the actual
flow of gas. However, as per the Directorate General of Hydrocarbons (DGH), RIL
had opted for a modern technique using a ‘modular dynamic tester’ which is much
faster and significantly cheaper. As per the DGH, RIL has conducted the prescribed
test for only D19 block, while for D2, D6 and D22 blocks, the company did not
conduct conventional tests (as required under PSC). The government's approval of
each discovery is needed before an operator can go ahead with the development
plan. RIL had proposed to invest US$1.5bn, which could potentially ramp up KG
D6 production by 10mmscmd. RIL is currently reviewing this issue. Hence, we
await further clarity on this matter. We maintain our Buy recommendation on the
stock with a target price of `1,060.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Government rejects RIL’s claims of six D6 blocks
The government has refused to recognize Reliance Industries’ (RIL) six discoveries
in its D-6 block claiming that the required tests were not conducted through
prescribed coventional tests. The production sharing contract (PSC) requires the
operator (RIL) of the block to conduct costly, conventional tests to check the actual
flow of gas. However, as per the Directorate General of Hydrocarbons (DGH), RIL
had opted for a modern technique using a ‘modular dynamic tester’ which is much
faster and significantly cheaper. As per the DGH, RIL has conducted the prescribed
test for only D19 block, while for D2, D6 and D22 blocks, the company did not
conduct conventional tests (as required under PSC). The government's approval of
each discovery is needed before an operator can go ahead with the development
plan. RIL had proposed to invest US$1.5bn, which could potentially ramp up KG
D6 production by 10mmscmd. RIL is currently reviewing this issue. Hence, we
await further clarity on this matter. We maintain our Buy recommendation on the
stock with a target price of `1,060.
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