New Delhi: Reliance Industries has surrendered 14 blocks back to the government after incurring an expenditure of Rs 1,400 crore in unsuccessful exploration.
RIL had in the New Exploration Licensing Policy (NELP) rounds won 45 blocks and of these it has surrendered 14 blocks back to the government as it could not find commercially recoverable oil and gas, sources close to the company said.
The company has invested over Rs 13,200 crore in exploring oil and gas and their appraisal in the 45 blocks but made commercial discoveries only in two blocks - KG-D6 in Krishna Godavari basin and NEC-25 in Mahanadi basin. Sources said RIL cannot recover the Rs 1,400 crore expenditure it incurred on seismic surveys and drilling wells in the 14 blocks and that would be treated as sunk or lost investment.
Exploration and production is a highly risky business and end results of the efforts are not known, and under the NELP regime the operators can recover their investment from sale of oil and gas only in blocks where they discover commercial hydrocarbons and the same in the rest are simply lost.
In the KG-D6 block alone, RIL has committed about Rs 38,000 crore till date of which Rs 28,000 crore have been already spent, they said.