The government has imposed a new penalty of $264 million (approximately Rs 1,700 crore) on Reliance Industries and its partners for failing to meet the set target of natural gas production from the eastern offshore KG-D6 fields in 2015-16, PTI reported on Tuesday. The firms partners in this venture are BP Plc, formerly known as British Petroleum, of the United Kingdom and Canada’s Niko Resources.

Dhirubhai-1 and 3 gas fields in the eastern offshore KG-D6 block were supposed to produce 80 million metric standard cubic meters per day. However, their actual production was only 35.33 mmscmd in 2011-12, 20.88 mmscmd in 2012-13 and 9.77 mmscmd in 2013-14. Currently, the output is below 4 mmscmd.

The Production Sharing Contract between RIL, its partners and the government had allowed the companies to deduct all capital and operating expenses from the sale of gas before sharing profits with the government. However, the government has now disallowed the companies to recover the costs incurred for missing the target for six years beginning April 1, 2010.

Disallowing costs will help the government increase its profit share. The official said the government has also asked for an additional $175 million as its profit share after the cost disallowance.

In 2010-11, the government had disallowed costs upto $457 million, $548 million for 2011-12, $792 million for 2012-13, $579 million for 2013-14 and $380 million for 2014-15. The total penalty now stands at $3.02 billion (approximately Rs 19,368 crore), an oil ministry official said.