The CAG in its report has asked the Oil Ministry to re-examine decision to allow Reliance Industries to keep entire KG-D6 block. It has also called for an exhaustively review of 10 contracts, including 8 awarded to Aker Group, by Reliance for developing KG-D6 finds.
According to the CAG report, RIL did not abandon 25% Of Total Contract Area and violated Production Sharing Pact on KG D6.
The CAG report also slammed the Directorate General Hydrocarbons (DGH) for having failed To Pursue Technical Aspects of KG DWL Block. DGH should have stopped RIL from proceeding on D6 Phase 2, the CAG report said.
CAG had alleged that RIL had revised the costs of developing the field by over $6 billion. Operators like Reliance are allowed to recover all capital costs incurred in developing a field from revenues earned from the sale of oil or gas before profits are split between the stakeholders, including the government. Thus, an increase in capital expenditure badly affects the government’s profitability.
The final report also includes some of the responses by RIL against CAG allegations. Replying to the draft audit report in July, Reliance said that “The CAG has set a benchmark for the lowest project costs across the world.”
RIL further claimed that the development cost in KG-D6 gas field was much less than what Gujarat government company GSPC and state-owned ONGC were spending on projects in the environs of its KG basin find.