Thursday, July 28 2005 16:18 Hrs (IST) - World Time -

New Delhi: Petroleum Minister Mani Shankar Aiyar today termed as 'premature,' Gujarat Chief Minister Narendra Modi's announcement that a state Government Company had discovered India's largest gas reserves, and said reserves could be estimated only after proper testing.

Gujarat State Petroleum Corp (GSPC), a firm owned by the Gujarat Government, last month discovered gas in exploration block KG-OSN-2001/2, off the Andhra coast, which Modi claimed contained 20 trillion cubic feet of reserves.

"While the notification of the gas find by the contractor would not be premature, any estimation of the reserves would be premature at this stage as such an estimate can be made only after production testing is completed, 3D seismic data is calibrated with drilled well data and a detailed study is made of the geophysical and geological data acquired in the block," Aiyar said in a written reply in Lok Sabha.

The Directorate General of Hydrocarbons, India's nodal agency for upstream oil and gas production, has "Described any estimate of GSPC's find as 'premature' adding that the finds are promising but the actual estimate will depend on test results," he said.

Aiyar said the announcement was not in conformity with the license given to GSPC for exploration, as reserves have to be first certified by DGH before making a public announcement.

The well KG-8 followed 10 million standard cubic feet per day of gas from one of the four zones in the well.

The company made discovery announcement before testing the three remaining zones in the well.

"While it is in order to make a public announcement about a discovery, it is not in conformity with the terms of the Production Sharing Contract (PSC) for a public announcement to be made about the estimated reserves before the reserves are certified by DGH," Aiyar said.

Further, in terms of the PSC, the contractor is promptly required to run tests to determine whether the discovery is of potential commercial interest and within a period of 60 days of the completion of tests, submit a report to the Management Committee along with all relevant data together with a written notification whether in the Contractor's opinion, such discovery is of potential commercial interest, he said.