Oil regulator DGH has cited practical difficulties in implementing the finance ministry’s suggestion that Reliance Industries should not be allowed to raise natural gas prices until it makes up for producing less than the projected output since 2010.
Within days of the Cabinet deciding to double natural gas prices to $4.2 per million British thermal unit from April 2014, the Department of Expenditure in the finance ministry on July 4 sent an office memorandum to the oil ministry, asking it to examine if RIL can be asked to deliver the shortfall it owes at the old price of $4.2.
Asked by the oil ministry to comment on the issue, the Directorate General of Hydrocarbons (DGH) on August 1 replied, saying estimates of production outlined when investment plans are approved much before the field is put to production vary with the subsequent targets approved by the field oversight committee headed by DGH annually.
"In most cases, the projected production in the FDP and in the annual work programme would not be identical. This is because of the dynamic nature of exploration and production activity, which needs to be adapted to in order to suit the ground realities," it wrote.