It was to be a swap felt around the world -- a plan privately discussed by the world's largest oil exporter and the globe's biggest consumer to take the heat out of $120-plus oil prices.In the weeks leading up to the failed June OPEC meeting, US and Saudi officials met to discuss surprising the market with an unprecedented arrangement: exchanging urgently-needed high-quality crude oil stored in the U.S. emergency reserve for heavier, low-quality oil from Saudi Arabia, according to people familiar with the plan.The idea involved shipping some of the light low-sulphur, or "sweet", crude out of the US Strategic Petroleum Reserve to European refiners, who needed it after the war in Libya cut off shipments of its premium crude varieties coveted for making gasoline and diesel.In return Saudi Arabia would sell its heavier high-sulphur or "sour" crude at a discount back to the United States to top up the caverns that hold America's emergency stocks.It was a striking suggestion, one that would have demonstrated Washington's readiness to put the SPR to extraordinary use and Riyadh's willingness to work creatively with consumers to quell high prices.But it did not make it past the drawing board, four sources familiar with the talks confirmed. The sources disagree on which country proposed the plan. Two said it fell apart because Riyadh was not willing to subsidize European or US customers by discounting its crude prices below market value.Pain In The PollsThe swap idea illustrates a recently deepening engagement between Saudi Arabia and the United States on oil affairs under President Barack Obama, and shows how high the stakes were ahead of the meeting of the Organization of the Petroleum Exporting Countries on June 8 in Vienna.With gasoline prices topping $4 a gallon in many parts of the United States, Obama was seeing his support ebb in opinion polls, just as the White House was beginning to focus on the 2012 election.The Saudis were concerned about the health of the global economy with oil prices surging above $100 a barrel. Riyadh knew that high prices, while good for short-term income, would cut fuel demand over the longer term.Washington had pressed Saudi Arabia to boost oil production at least twice ahead of the OPEC meeting that ended in failure, sources told Reuters.After war broke out in Libya and its oil output fell, the Saudis complied with the initial request, but they weren't happy when European refiners didn't jump to buy their crude, even a "special brew" of lighter quality, an Arab official said."We need someone to take our crude. We don't just want to store it," the official said.Industry sources described a "difficult" Riyadh meeting that a US delegation held about a month ago with Saudi Oil Minister Ali al-Naimi."They were told, 'If you're going to find us extra refineries that are asking for demand, we'll supply that,'" the Arab official said.Deputies from the US Energy and Treasury departments also visited Riyadh to make the case for stepped-up oil production, a source close to the Saudi government said, although the timing of this meeting was unclear.One of the officials who attended that meeting was Jonathan Elkind, Principal Deputy Assistant Secretary for Policy and International Affairs at the Energy Department, a source told Reuters.Within days, Elkind was flying to Paris for a regular meeting of the board of governors of the Paris-based International Energy Agency, which speaks for 28 industrialized oil consumer countries.After that meeting, the governing board released an unusually blunt statement urging OPEC to raise output and announcing that it would consider using "all the tools" at its disposal -- a clear reference to emergency reserves.The US State and Energy Departments would not comment on whether the meetings took place or offer other details, while the White House has acknowledged regular talks with producers without being specific about their content.Pressures BuildSet up in 1974 to protect oil consumers after the Arab oil embargo, the IEA has held an open and cordial dialogue with OPEC ever since the Gulf War in 1990-1991, one of only two times it has authorized a global release of strategic stocks.But the May 20 missive suggested a new cooling in the relationship between the world's big oil consumers and producers, and provoked a backlash from some in OPEC."Strategic reserves should be kept for their purpose and not used as a weapon against OPEC," OPEC Secretary General Abdullah al-Badri told the Reuters Global Energy and Climate Summit on Tuesday."We never interfere in the IEA and really we don't want them to interfere in our business. They should do it in a professional manner. We should not talk to each other through the media."Washington appears to have mostly heeded that comment, and kept quiet about its engagement, in contrast to previous administrations.In April, Obama -- who has several times blamed speculators for the run-up in prices -- made a rare public call for world oil producers to boost production."We are in a lot of conversations with major oil producers like Saudi Arabia," he said in a Detroit television interview.The tension within the cartel boiled over last week in Vienna, when seven members of the group balked at a Saudi-led plan to increase production. While ministers said the breakdown was caused by differing views over the market outlook in the second half of this year, Iran blamed unspecified "consumer countries" for influencing the debate."What happened shows OPEC is an independent organisation," OPEC governor Mohammad Ali Khatibi told Reuters. "If one wants to exert pressure to make the others give up -- no."The Kingdom declared it would go it alone. Sources say Saudi Arabia is raising production in July by nearly 1 million bpd to around 10 million bpd, although Brent crude oil prices have continued to press higher, reaching a five-week peak of more than $120 a barrel on Tuesday.(Reuters)
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For real estate companies, it has been an unusually bad year. Poor sales, few new launches leading to poor ‘booking' income, and a race against time to reduce high debt have defined the year. In case of some of the big realtors such as DLF, even while total income increased in FY 2011, net profit declined on poor margins and high input costs.DLF reported a consolidated total income of Rs 10,144 crore in 2010-11, up from Rs 7,851 crore in the previous financial year. However, net profit fell 4.7 per cent to Rs 1,640 crore from Rs 1,720 crore in the previous year. For the past quarter, net profit fell 19 per cent to Rs 345 crore as the company adjusted Rs 475 crore towards "one-time cost reset due to input price inflation". The company admitted sales volume had declined 20 per cent to 10 million sq. ft in FY 2011 from 12.5 million sq. ft in the previous year.For Unitech, too, total income rose 9 per cent to Rs 3,187 crore for FY 2011, but net profit slumped by over 16 per cent to Rs 581 crore from Rs 695 crore in the previous year. Another big Delhi realtor, Omaxe, pushed up consolidated sales from Rs 1,001 crore to Rs 1,522 crore through FY 2011, but net profit plummeted nearly 18 per cent to Rs 93 crore from the previous year's Rs 113 crore. Mumbai-based realtor HDIL performed marginally better. The group's annual top line grew 24 per cent to Rs 1,900 crore, while net profit went up 45 per cent to Rs 823 crore for the year ended 31 March.The fourth quarter has proven to be the biggest drag with a slowdown in sales volumes and high input costs squeezing margins. According to an Enam Securities report on the Q4 performance of realtors, revenues for the January-March quarter of 2011 for most developers (with the exception of Godrej Properties and Indiabulls Realty) declined 10-30 per cent due to slowdown in sales. Simultaneously, high input costs hit margins in the range of 2-10 per cent. DB Realty, whose credibility has taken a knock with its promoters Shahid Balwa and Vinod Goenka jailed for their role in the 2G spectrum scam, saw its Q4 profit-after-tax sink to just Rs 8 crore on sales of Rs 392 crore for the quarter. Click here to view enlarged image Interestingly, there has been some spin-off effect from the slowing realty sector on engineering, procurement and construction (EPC) companies, which came under severe earnings pressure in the latest quarter. An analysis by Angel Broking of construction companies showed that except for Sadbhav and MPL, which showed robust growth in net profits, most others including Simplex reported a fall in net profits. "Margin pressure due to high commodity prices and spiralling interest cost resulted in disappointing earnings despite decent top-line growth," the report said.Investor confidence, or the lack of it, has been ahead of the results. In the past 18 months since January 2010, the BSE Realty Index has plunged 44 per cent, compared to a 5 per cent rise in the BSE Sensex. "The market was expecting capital infusion from operations would help improve the financial health of real estate companies. But failing to sell sufficient stock has led to a poor show by these companies," says Varun Goel, head of equity-PMS at Karvy Private Wealth. Property pundits feel the paralysis in the market may pan out over another 3-4 quarters before sales begin to move. "There is sufficient demand in the market, but property buyers are waiting for a 15-20 per cent correction in prices, while sellers aren't willing to bring down prices," explains Goel. Governance issues have now become evident after a string of scams, and that has further eroded market confidence.(This story was published in Businessworld Issue Dated 20-06-2011)
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Adani Enterprises has agreed to buy Abbot Point Coal Terminal in Australia for $2 billion in an all-cash deal to tap into growing coal traffic in overseas markets, a unit of the Indian firm said on Tuesday.Indian firms are eyeing coal assets overseas to supply power plants in India, looking to benefit from the energy-hungry nation's aim to halve its nearly 14 per cent peak-hour power deficit within two yearsThe Abbot Point Coal deal is one of the largest acquisitions of an Australian asset by an Indian company since Adani acquired Linc Energy's Galilee coal project for $2.7 billion last August.Analysts said the acquisition of the terminal by Mundra Port and Special Economic Zone, the port operating arm of Adani, would help Adani ship coal from Galilee to its power plants in India and tap into the growing coal cargo in the region."It's a good deal for Mundra Port as the Abbot Point terminal will have assured cargo from Adani's own mine there as well as other coal mines in the region," said Kapil Yadav, a sector analyst with Mumbai brokerage Dolat Capital."The deal will have an impact on the company's balance sheet in the near term due to the debt taken for this," he added.Mundra Port's chief financial officer B. Ravi said the company had arranged short term mezzanine debt to fund the deal and said Standard Chartered was arranging the debt. He did not disclose the amount.India holds 10 percent of the world's coal reserves, but a shortfall in local supplies has grown rapidly because of an increase in coal-fired power plants. The country is likely to import 135 million tonnes of coal in the fiscal year that began on April 1.Shares in Mundra Port, which has a market value of $6.5 billion, were trading down 2.5 percent at 140.1 rupees at 0725 GMT, while Adani Enterprises shares were trading up 0.6 per cent at Rs 632.6 in the Mumbai market that was down nearly 1 per cent.Beating CompetitionMundra Port said the coal export port sold by the government of the state of Queensland is expanding to increase capacity to 50 million tonnes per year from about 20 million tonnes now.There is room to increase the port's capacity to 80 million tonnes, Mundra Port said in a statement. The unit is India's largest private port operator and handles 50 million tonnes of cargo annually.Abbot Port is expected to generate revenue of A$110 million ($120.3 million) in 2011, growing it to A$305 million in 2016, Mundra Port said.Sources familiar with the deal had told Reuters earlier that Adani, which was competing with Australian mining tycoon Nathan Tinkler, had won the bidding.Located in North Queensland in Australia, the Abbot terminal services three mines in the Bowen Basin. The state of Queensland is selling the terminal as part of a A$15 billion infrastructure privatisation programme.The Queensland government has already raised at least $6.3 billion from the sale of the Port of Brisbane and the $4 billion float of rail freight business QR National Ltd."The (Abbot) transaction has delivered proceeds well above initial expectations of $1.5 billion," Queensland Premier Anna Bligh said in a statement.Bank of America Merrill Lynch advised the Queensland government on the deal. Mundra Port's Ravi said the company did not use external advice for the acquisition.(Reuters)
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Ugandan businessman Hardip Singh's father did the sensible thing. He had four sons, but just one great asset: a luxury bungalow in south Delhi's posh Friends Colony. He sold it a few years ago to the Jhunjhunwalla family and bought four large 1,000 square-yard plots for each of his sons in Noida's in-demand Sector 15. All the four now own modern, resplendent homes with well-manicured lawns and thank their father for his foresight. Hardip and his brothers are not the only ones wanting to escape the crowded core of India's big cities. The country was initially slow to urbanise, but the early trot is now turning into a gallop. In 1951, there were only five metropolitan cities with a population of over one million. By 2001, there were 35, and their share in the urban population increased from just 19 per cent to 38 per cent. Today, there are 50 big cities with more than a million people, and there will be 87 by 2031. The urban-rural ratio is also changing rapidly with 35 per cent of the country now living in urban sprawls, and the figure is expected to touch 45 per cent by 2031.More importantly, cities will propel the country's future growth. As the 2010 McKinsey's report on India's urbanisation says, over 2010-30, Indian cities will create 70 per cent of all new jobs, and these jobs will be twice as productive as those in the rural sector. But urban governance and infrastructure development in the form of housing, water supply and roads do not match the big demographic shift towards cities. On an average, more than 25 per cent of most Indian cities live in slums. In Mumbai, the latest National Sample Survey data suggest 60 per cent of its populace live in slums. To give a better quality of life and to develop planned 'counter magnets' to over-crowding cities, the concept of satellite towns came into the planning lexicon in the 1970s. Today, there are hundreds of satellite towns that dot the hinterland around big metropolises. Some of them are old transport nodes and habitations that have naturally grown, like Faridabad near Delhi or the Virar-Vasai belt in Mumbai. Others have been specifically planned, such as Noida, Navi Mumbai and Rajarhat in Kolkata. Have they worked? Have they given new inhabitants a better life?Counter MagnetsThe natural sequel to the growth of capitalism and concentration of manufacturing and services in central hubs is the concentration of people in towns and cities. Urban expansion takes the form of radial growth in concentric rings around existing cities when there is a hinterland available to 'colonise'. Simultaneously, too, small towns and large villages bloom. They abut metropolises as centres of industry or 'dormitory' adjuncts to the mother city. Faridabad and Ghaziabad, once sleepy villages, became important 'satellites' to Delhi as they rapidly expanded as industrial centres. So were Pimpri and Chinchwad to Pune. For Mumbai, the expansion was initially northwards. Villages such as Kashi Mira and Virar became satellite towns as expanding families left their one-room tenements in Dadar and Central Mumbai to relocate to larger flats 60 km away.But this was a town planner's nightmare, as satellite towns sprouted without infrastructure and layouts. "This has been the predominant form of expansion. First build, and then retrofit the town with roads and civic facilities," says Pankaj Joshi, executive director of the Urban Design Research Institute (UDRI) in Mumbai.To introduce some method to the madness, planners began pushing for planned satellites around big metropolises in the 1970s. The fourth and fifth Five-Year Plans (1969-79) first envisaged planned smaller towns to prevent growth of population of large cities. The concept of 'New Bombay' - now Navi Mumbai - was born in 1964 with architects and planners Charles Correa, Sirish Patel and Pravina Mehta proposing the 'twin city on water' on the eastern mainland as a counter-magnet to the rash and unplanned growth towards the north. More recently, in 2007, the Hyderabad Urban Development Authority (HUDA) put plans in motion to create 22 satellite townships along the proposed 162-km Outer Ring Road. Work on two - Tellapur in Medak district, and Srinagar in Ranga Reddy district - has kicked off. The Karnataka government, in 2006, announced five satellite towns to decongest Bangalore. Spread across 5,000-15,000 acres, these are located at Nandagudi in Hoskote taluka, Kasaba and Bidadi in Ramanagaram and Solapur and Sathnur in Kanakpura. They will be connected with an Outer Ring Road beyond the Peripheral Ring Road. "It is perpetually the never-ending last mile," urban planner Keller Easterling once said on the radial expansion of satellite cities as nodes on a multiplying number of ring roads. Satellite Wars As satellite cities proliferate and become unmanageable, there is a raging debate on whether planned 'satellites' should be the way forward or should development take the 'natural' course of nudging along developing villages and towns on metropolises' periphery with plans and funds. Joshi says Navi Mumbai was a set of dead enclaves in the early 1990s, and grew only after the railway corridor came into existence. "The planning perspective should have been to develop old towns such as Bassein and Virar. It is an inversion of values. You should conceive a planning environment for these areas, which have a marked potential for growth," says Joshi. Echoing him is P.K. Das, an architect who is planning the Adani Port City near Jamnagar. He says planned satellite cities such as Navi Mumbai have taken away funds and planning focus from 'natural' nodes such as Panvel and Pen. "Rather than the mother city engulfing the outer hinterland, you should allow existing nodes around the metropolis to grow with decentralised plans, and the state providing transport links and budgetary support."Satellite towns are successful if they provide quality services that equal the mother city and have good transport corridors. Gurgaon was 30 years in the making, notes Anshuman Magazine, CMD of property consultant CB Richard Ellis. It has been seen as a success only in the past six years as it offered the middle class everything from malls to massages, he says. "It started with the DLF Corporate Park promoting the concept of 'walking to work'." But then, Maraimalai Nagar near Chennai lay dormant for decades as it had no schools or hospitals of high standards, while Kalyani, the last stop on Kolkata's Sealdah corridor, did not succeed as it had no quality schools though it boasts a university.Planned townships often have not been able to take off as they have run into farmers' agitations against acquiring cultivable land. Like the protests on the Agra Expressway, Chennai too faced protests against its 'Thunai Nagaram' (satellite city), and the DMK government had to drop its 'de-congestion plans in 2006. Three satellite towns reappeared in Chennai's second draft master plan along the Old Mahabalipuram Road (OMR), currently a thriving commercial and residential hub, the Outer Ring Road and the Poonamallee Road. But the Chennai Metropolitan Development Authority made it clear it would only be providing the infrastructure, and it left the land acquisition to the private sector. break-page-breakKolkata's Rajarhat, too, had its share of controversies as it was also built on farm lands. The media was splashed with charges that CPI (M) operatives in the know of the acquisition bought land from unsuspecting farmers at Rs 1.2-1.8 lakh an acre, and sold it at a five-fold profit for Rs 6 to 7.2 lakh an acre. "The problem is satellite development is seen as a real estate opportunity. Planning becomes a tool for that, and not as a matrix for human development," notes Das.From NoidaVillage To NoidaVilleMost urban think tanks are cool to the idea of satellite cities. Chetan Vaidya, director of the National Institute of Urban Affairs (NIUA), says they have not been successful as demographic tools. They have not been able to stop migration into mother cities. But Vaidya admits "Gurgaon, Noida and Navi Mumbai are partially successful as real estate developers of Delhi and Mumbai did not allow access to affordable housing." He, however, says that PPP models such as the town planning scheme in Gujarat are more successful than the model of large-scale land acquisition and development in Navi Mumbai or Noida. In Ahmedabad and Surat, landowners became willing partners in town-planning as they knew land prices would shoot up the moment an urban layout was notified. Government investment has been, therefore, limited to roads and infrastructure development. Vaidya also says that instead of looking for counter magnets, governments should promote medium-sized cities and focus on governance in metropolises.But Magazine says satellites such as Gurgaon and Navi Mumbai have stemmed migration, kept real estate prices in check in metropolitan centres and reshaped the lives of the urban middle class for the better. "A couple in Gurgaon can go to work together, and in the evening enjoy a round at the bowling alley. You might see a cow on the road, or a few potholes, but the lifestyle is no different from Dubai or London." This excerpt from a post by 'Aparna' on noidascoop.com sums up the middle class sentiment: "When I dated my husband, I liked everything about him except that he lived in Noida. In 1994, when I came to Noida nothing was available. We had to go cross the Nizamuddin bridge and shop at South Ex (in Delhi). I felt isolated, lonely. But slowly I started going for Atta (market) and (Sector) 18. Every week, there was a new shop, an eatery, hospitals, movie halls, hotels… Now, the latest malls are just icing on the cake. Life has become so comfortable that I don't want to move out. Our lovely city is converting from NoidaVillage to NoidaVille!"On the real estate front, property pundits point out that had satellite town, not been there to ease the pressure of short supply, prices in the inner core of the city would have risen astronomically. According to CB Richard Ellis, Gurgaon and Noida in 2010 contributed 9 million units to the housing market while Navi Mumbai, Thane and Mumbai's northern satellites supplied an additional 9-10 million units. In Bangalore's Whitefield and Electronic City, new supply was about 7 million homes.Again, relative prices in satellite towns are cheaper than in similarly positioned locations in the mother city, giving consumers a viable budgetary option. For instance, in Navi Mumbai's Panvel or Khargar, prices average around Rs 4,500-6,000 a sq. ft. In comparison, at crowded Borivali and Kandivili in north Mumbai, new bookings cost Rs 8,000-12,000 per sq. ft when the rail travel time is about the same. But that is just the problem some planners are critical about. Successful satellites have become plush suburbia for the middle class with little space or affordability for the poor. Pointing to gated communities such as the NRI Complex in Navi Mumbai and ATS village, Parsvnath and Eldeco colonies in Greater Noida, Das says: "Leave it to the market, and the builders will only build gated communities for the rich." Engines Of GrowthDespite these doubts, satellite development has become an integral part of urban planning. HDFC chairman Deepak Parekh in his 2009-10 company report said: "Satellite cities have to be built as connected cities, having sophisticated transport networks like trans-harbour links, bridges and underground links." Guidelines by the Union Ministry of Urban Development for urban infrastructure development in satellite towns note: "There is an imperative to plan for development of new townships/satellite towns around million-plus large cities. The satellite towns/ counter magnets should be spatially separated from the mother city." The guidelines name 35 key cities for 'satellite development' and propose initial funding from the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) for creating 300,000-500,000 (populace) towns as satellites for million-plus cities and towns in case of mega cities with population exceeding 4 million.As part of the planning for the Mumbai Metropolitan Region (MMR) that encompasses a humongous 4,355 sq. km. of hinterland around the island city spread over four districts, nine municipalities and over 900 villages, a crucial project on the anvil is the Virar-Alibaug transport corridor. Proposed by Surbana Consultants, who have anchored Singapore's urban planning, the corridor will run 140 km and will aim to develop 5-6 satellite towns as nodes along the corridor. The new towns proposed are around the existing towns of Bhiwandi, Kalyan, north and south of Panvel.India is better positioned than other developing economies with much of its urbanisation still to come in the future. Just 30 per cent of Indians are living in towns and cities, compared to China (45 per cent), Indonesia (54 per cent), Mexico (78 per cent), and Brazil (87 per cent). But time is obviously catching up. By 2031, the urban population will be touching 40 per cent or around 600 million. The United Nations projects that urban India will be larger than its rural cousin by 2045. Talking of creating economically vibrant, inclusive and efficient cities, Union Urban Development Minister Kamal Nath said he saw them as "engines of economic growth". Hopefully, this will not remain just another pithy statement for intellectual gatherings.gurbir(dot)singh(at)abp(dot)in(This story was published in Businessworld Issue Dated 20-06-2011)
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Isher Judge Ahluwalia, chairperson of the Think Tank Icrier, chaired the High Powered Expert Committee on urban infrastructure. After labouring for nearly two years, the panel has submitted its recommendations to urban development minister Kamal Nath. Ahluwalia talks to BW's Gurbir Singh about the problems of satellite towns, and how to make our cities more liveable. Excerpts:In the future, do satellite cities still have a place in urban planning?It depends on various factors, especially transport and housing. If these are provided in metropolitan planning in satellite cities, they become feasible. On the other hand, you can have independent, regional hubs, like what Dewas is to Indore. How do you evaluate key satellite cities such as Navi Mumbai and Gurgaon? Navi Mumbai had got quite a few things right. We were impressed by the quality of governance, and the waste-water treatment system. Gurgaon, on the other hand, is more haphazard where basic tenets have not been met. For satellite cities, pubic-private partne-rship works if risks are assigned. But there are problems if the government does not know the risks they are transferring to the private sector. Most whine about the rash growth of cities. But your report sees them as founts of energy. Generation of wealth is increasingly dependent on the knowledge industry, and more and more cities have become reposi-tories of knowledge and technology. Without cities, growth will not happen. But we should think of cities and their hinterland as one continuum. It is a mistake to highlight the rural-urban divide, as it is an artificial divide. You see governance as a core issue. How can this be addressed?We need municipalities and corporations with secure sources of revenue, local bodies that can guarantee money is well spent, and that are accountable to the people. They must become market-worthy, be able to raise money through market bonds. Then they will have money to spend on, say, an efficient water delivery mechanism, and not depend on some state government Jal Board. Autonomy is a big problem dogging the governance of cities. Central and state governments don't allow decentralisation of local bodies as they think "where will they get their capital from?" But without reforming city government, how will we build cities? It is not a problem of money, but of systems and governance.Did you come across municipalities that have performed exceptionally well?Yes, we found Hubli, Dharwar and Gulbarga in Karnataka handling their drinking water supply networks very well. The experiment of Gorai, a suburb of Mumbai, turned out to be extremely successful. Gorai spent Rs 50 crore in putting its waste disposal system in place, and in turn earned Rs 70 crore in carbon credits.You have proposed an investment of Rs 39.2 lakh crore for urban infra-structure development over the next 20 years. Where will the money come from? From devolution of taxes, from state government allocation, from property tax reforms. We have also proposed a reformed JNNURM or New Improved (NI) JNNURM. We want it to be inclusive of all cities, not just the current 65. And it should be programme-oriented and not project-based as it is now.(This story was published in Businessworld Issue Dated 20-06-2011)
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India's upstream regulator said on Monday it had asked Reliance Industries to drill 11 new wells by April 1, 2012, in a key block off the country's east coast where the private firm has failed to meet its gas production target.Reliance is pumping less gas than it should from the key D6 block of Krishna-Godavari basin, the second biggest gas producer in India after Mumbai High. Reliance was supposed to drill nine wells in this fiscal year. It will now have to drill two extra wells that it had failed to drill in FY11.Upstream Regulator S.K. Srivastava said Reliance was currently producing 48 Mmscmd gas from the D6 block, adding it would meet Reliance officials "in a week or two" to discuss the fall in gas output. On April 21, Srivastava said Reliance was producing 50 Mmscmd from the block.The company, which has agreed a broad parternship with multinational BP on field development, said in March it wanted to work to overcome "the technical challenge involved in these complex reservoirs."Srivastava said last month Reliance had not given a satisfactory reason for the shortfall.(Reuters)
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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)
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The Central Bureau of Investigation is looking into the role of the oil ministry after it was criticised by the CAG for allowing some exploring companies to overstate costs of field developments and explore beyond their contracted areas, a newspaper report said on Tuesday.The Economic Times said the Central Bureau of Investigation (CBI) was also investigating the upstream regulator for approving escalated costs for Reliance Industries' D6 block in the Krishna-Godavari basin from $2.4 billion in 2004 to $8.5 billion in 2006."We are at an advanced stage of investigation in our preliminary inquiry," the newspaper quoted an unnamed senior CBI official as saying."Whether (a complaint) will also name other officials of the petroleum ministry will be taken at the time of registering an FIR (formal police case)."The Comptroller and Auditor General's (CAG) report said energy major Reliance had inflated development costs on its D6 block in the Krishna-Godavari basin and cited a joint venture of Reliance with BG and ONGC for hiking development costs in the Panna-Mukta and Tapti gas fields.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 CAG report is a draft which has been sent to the oil ministry for comments. The ministry has said it has two weeks to reply.(Reuters)
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