Government to earn $2 bn as royalty from K-G basin

December 8th, 2009 - 9:44 pm ICT by IANS  

New Delhi, Dec 8 (IANS) The government will earn a royalty of $2 billion from the sale of gas from D6 block in the Krishna Godavari basin, being operated by the Mukesh Ambani-led Reliance Industries.
In a written reply in the Rajya Sabha, Petroleum and Natural Gas Minister Murli Deora said the royalty was revised to $2 billion from the earlier estimate of $700 million due to the increase in recoverable reserves.

Earlier, the recoverable reserves were estimated at 3.81 trillion cubic feet (TCF), which was revised to 10.03 TCF.

The royalty was calculated at a price of $4.2 per unit.

Deora noted that so far Reliance Industries and its partner, Niko Resources, had drilled 18 development wells, which could achieve a plateau rate of gas production of 80 million metric standard cubic meters (mmscmd) per day.

“However, when the production declines from these existing wells, the contractor will be required to drill new wells to arrest the decline and maintain the plateau production rate of 80 mmscmd,” said the minister.

The field development plan allows for drilling of maximum of 50 development wells over the estimated field life of about 13 years.

“If more number of wells are required to be drilled, the contractor will have to submit new proposal in this regard for approval by the management committee,” Deora said.

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