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CAG Targets Inflated Oilfield Costs

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[The Comptroller and Auditor General (CAG) has criticised the oil ministry and upstream regulator for allowing some explorers to overstate costs of field developments and explore beyond their contracted areas, newspapers reported on Monday. The CAG's report said Reliance Industries had inflated development costs on its D6 block in the Krishna-Godavari basin, according to the reports in the Hindustan Times and the Times of India. The CAG also cited a joint venture of Reliance with BG and ONGC for hiking development costs in the Panna-Mukta and Tapti gas fields, the newspapers added. The CAG report also said Cairn India Ltd had been allowed to explore additional areas not stipulated in its contract for the RJ-ON-90/1 block, the Hindustan Times said. The Times of India and the Hindustan Times both said the CAG report focused on Reliance. "The undue benefit granted to the contractor (Reliance) is huge, but cannot be quantified," the report said, according to the Hindustan Times. "The (oil ministry and upstream regulator) facilitated the desires of the contractor (Reliance)," the Hindustan Times added, again quoting from the report. The CAG report is a draft which has been sent to the oil ministry for comments, the newspapers said. No immediate comment was available from Reliance and Cairn India on the reports. Reliance is already facing criticism for pumping less gas than it should from the key D6 block, one of the biggest gas producing blocks in India. Cairn Energy is trying to sell a controlling stake in its India unit to Vedanta Resources, but the deal has run into problems over royalty issues. The CAG report comes at a time when the Indian government is struggling to fend off allegations of massive corruption in awarding of telecoms licences that may have resulted in revenue losses worth billions of dollars. (Reuters)