KG Basin’s rising capex now under petro min lens
Reliance Industries’ (RIL) KG Basin woes may continue for a while even after the empowered group of ministers’ (eGoM) decision on the gas pricing formula. The revised $8.83-billion capital expenditure plan approved by the managing committee for producing gas from the D6 block in the KG Basin is expected to occupy centre stage in the discussions within the government over the issue.
This time around, the issue of increased capex has been raised by the petroleum ministry itself. Taking a serious note on an “inordinate” delay in appointing an independent international consultant to verify RIL’s capex plan, petroleum minister Murli Deora has called for explanations from the directorate general of hydrocarbon (DGH). The revised capex of $8.83 billion (from initial $2.47 billion) was approved by the management committee (MC) headed by the director general of DGH.
RIL has, however, maintained that its exploration and production cost is amongst the cheapest in the world when it comes to deepwater projects. The increase in the costs is primarily due to a steep escalation in the cost of drilling rigs and the expanded scope of work.
