An additional penalty of USD 579 million (Rs 3,500 crore) has been imposed on Reliance Industries for producing natural gas in less-than-targeted volumes from its KG-D6 block. With this, the total penalty on RIL for under-performance in four fiscal years comes to USD 2.376 billion (Rs 14,300 crore). The penalty is levied in the form of disallowing the costs incurred during the company operations. The deal allows RIL and its partners BP Plc and Niko Resources to deduct all capital and operating expenses from the gas sales before sharing profit with the government. The penalty will result in the government's profit share rising by USD 195 million in 2013-14.
The oil ministry and its technical arm DGH blame the non-drilling of committed wells for the deficit while RIL says unexpected geological complexities like sand and water ingress had led to the fall.