CAG says in process of finalising report on KG-D6 gas fields

NEW DELHI: Government auditorCAG today said it is in the process of finalising its report on Reliance Industries'sKG-D6 gas fields. Refuting allegation by theReliance Industries that it was not given enough time to respond to the audit observations, Comptroller and Auditor General of India Vinod Rai said, "We have given Reliance enough time to respond... it (the CAG report) is in the process of being final".

Rai was responding to a query on Reliance Industries' statement that the time CAG allocated to the company was "far too inadequate" to answer issues raised in the audit.

On July 12, CAG held the Exit Conference with private firms and the oil ministry prior to finalising its audit report on Reliance's KG-D6 gas field, Cairn's Rajasthan oil block and BG's Panna-Mukta and Tapti oil and gas fields.

The conference was held as a prelude to finalising its report on KG-D6 fields and taking comments from the companies on its June 7 draft report.

CAG has stated that the oil ministry and its technical arm DGH favoured private firms like Reliance andCairn India by allowing them to retain entire exploration acreage, turning a blind eye to increase in capital expenditure and giving additional area in violation of Production Sharing Contract (PSC).

In the draft report, the CAG said rules were bent, enabling Reliance to retain the entire 7,645-square kilometre KG-D6 block in the Krishna-Godavari Basin, off the East Coast.

Also, the development plan Reliance submitted for Dhirubhai-1 and 3, two of the 18 gas discoveries in the KG-D6 block, was not in compliance with the PSC and the ministry and the DGH turned a blind eye to the company raising capital expenditure without having begun work on the previous plan.

Reliance had in May, 2004, proposed an investment of $ 2.4 billion for producing 40 million standard cubic metres per day of gas from the D1 and D3 fields.

Later, in October, 2006, it moved an addendum to this saying $ 5.2 billion would be required in Phase-1 to produce 80 mmscmd of gas and another $ 3.3 billion to sustain the peak output for a longer duration.