Full coverage of the RIL-KG D6 basin controversy

A round-up of the much-talked-about KG-D6 basin and the role of CAG
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First Published: Thu, Nov 01 2012. 02 40 PM IST
An oil platform at Reliance Industries’ Krishna Godavari basin block.
An oil platform at Reliance Industries’ Krishna Godavari basin block.
Updated: Thu, Nov 01 2012. 05 50 PM IST
Reliance seeks adequate time to respond to CAG report
New Delhi: Reliance Industries has sought “suitable opportunity” to respond to a CAG report that indicts it on receiving undue favours from the oil ministry, saying the official auditor had not discussed many of the findings mentioned in the draft report.
Reliance executive director P M S Prasad on 29 June wrote to oil secretary G C Chaturvedi protesting that his firm has not received the full copy of the draft CAG report and was never consulted on many issues pointed in the reports. (read more)
Reliance, DGH, oil ministry in the firing line
New Delhi: The government’s auditor said in a report that Reliance Industries Ltd (RIL) had breached some terms of a production-sharing contract (PSC) with the government for one of its more lucrative blocks, and blamed the petroleum ministry and one of its arms for their failure to provide adequate oversight of the process.
The Comptroller and Auditor General of India (CAG) also said the current PSC template encouraged companies to front-load expenditure as it correspondingly reduced the share of the government in the profits. (read more)
Fresh poser for Reliance on KG block
New Delhi: One of the government’s top law officers has advised that the petroleum ministry should make the costs that Reliance Industries Ltd (RIL) can recover from its lucrative block in the Krishna-Godavari (KG) basin dependent on capacity utilization, thus protecting the exchequer’s share of future revenue from the sale of gas and oil from the area.
The ministry’s action comes after RIL wasn’t able to achieve projected capacity utilization in the KG-DWN-98-3 block, even though the company had already recovered most of the costs associated; it had invested $5.69 billion (Rs 26,800 crore today) in the block as on 31 March and recovered $5.26 billion of this. The government’s share of profits is calculated after deduction of costs by the company. (read more)
CBI may file case against Reliance
New Delhi: India’s federal investigating agency is considering registration of a case or multiple cases against Reliance Industries Ltd (RIL) for alleged irregularities in the operation of the firm’s block in the Krishna-Godavari (KG) basin, said three officials at the Central Bureau of Investigation (CBI), who declined to be named.
“The matter is at the inquiry stage and no information can be shared with the media,” said Dharini Mishra, spokeswoman for the agency. A spokesperson for RIL declined to comment. (read more)
CAG begins conducting new audit of KG block
New Delhi: The Comptroller and Auditor General of India (CAG) has begun examining the books of Reliance Industries Ltd (RIL) to see whether there was any loss to the exchequer at the company’s D6 block in the Krishna-Godavari (KG) basin in 2008-09 and 2009-10.
This follows its review of the block until the 2007-08 fiscal year, which didn’t contain references to the so-called goldplating as production, and therefore, revenue from the KG-DWN-98/3 block started in 2009. CAG, however, did point out in the earlier report that RIL had declined to share information that would have enabled the auditor to critically examine the justification of the company for cost escalations. CAG’s Performance Audit of Hydrocarbon Production-sharing Contracts report was submitted to Parliament earlier this month. (read more)
Fresh caution from CAG on RIL gas block
New Delhi: The Comptroller and Auditor General of India (CAG) has raised concerns about the costs claimed by Reliance Industries Ltd (RIL) for the development of its D6 block in the Krishna-Godavari basin.
In a letter dated 3 October and addressed to the petroleum ministry, the government’s auditor has, among other things, made it clear that the government should attempt negotiating with RIL on the costs and how they should be recovered only after a proper audit of the expenditure incurred by the company after 2008-09; the CAG audit, enclosed in its report tabled in Parliament on 8 September, pertains only to fiscal years 2006-07 and 2007-08. (read more)
Govt seeks to protect KG D6 revenue share
New Delhi: In what could pose fresh problems for Mukesh Ambani-led Reliance Industries Ltd (RIL), India’s oil ministry may link recovery of costs to capacity utilization at the D6 block in the Krishna-Godavari basin, India’s largest discovered natural gas reservoir.
The ministry’s move is aimed at protecting the exchequer’s share of future revenue from the sale of gas from the block.
“On 9 November, petroleum minister S. Jaipal Reddy accepted the solicitor general’s opinion,” a top government official said, speaking on condition of anonymity. (read more)
RIL begins arbitration process over KG D6 costs
Mumbai/New Delhi: Reliance Industries Ltd (RIL) has begun arbitration proceedings in anticipation of the government’s reported move to restrict the cost recoverable by the firm for developing the D6 field in the Krishna Godavari (KG) basin depending on the level of utilization, the company said in a statement on Monday.
RIL’s statement said that it sought clarification from the oil ministry about such a move, but received no response. An RIL official said the letter was sent in September. He declined to be identified. (read more)
Govt tones down on KG D6 falling output
New Delhi: The government appears to have altered its stand on limiting the costs Reliance Industries Ltd (RIL) can recover from its investments in the D6 field in the Krishna-Godavari (KG) basin, with oil minister S. Jaipal Reddy saying on Friday that it would not try to change the terms of its the production-sharing contract (PSC) with the company.
“There will be no change in the PSC,” Reddy said on the sidelines of the third India-Africa Hydrocarbon Summit. “If there are changes, they will be from the 10th round of Nelp (new exploration licensing policy)…we will do nothing which will affect the pace and quantum of production at KG basin.” (read more)
Oil ministry may deny RIL cost claim
New Delhi: India’s petroleum ministry has gone on the offensive in its ongoing dispute with Reliance Industries Ltd (RIL) and is proposing to deny $1.24 billion (around Rs 6,585 crore today) in costs claimed by the company on the D6 field in the Krishna-Godavari (KG) basin, which could potentially put the squeeze on its profits.
Accordingly, the ministry plans to disallow RIL this cost recovery from the D6 block for 2010-11 and 2011-12. Instead, the sum will be added to profit petroleum for the respective years. Profit petroleum is the government’s share from hydrocarbon blocks. (read more)
Stage set for nod to Reliance-BP deal
New Delhi: The decks have been cleared for formalizing one of India’s biggest foreign direct investment (FDI) deals after the petroleum ministry unconditionally approved the proposal allowing Mukesh Ambani-owned Reliance Industries Ltd (RIL) to offload a 30% stake in its hydrocarbon blocks to London-based BP Plc.
The cabinet committee on economic affairs (CCEA) is slated to take up the proposal next week. BP is to pay $7.2 billion (Rs 32,000 crore today) for a 30% stake in RIL’s 23 oil and gas blocks, including the D6 one in the Krishna-Godavari basin. (read more)
PAC questions RIL executives on D6 cost escalation
New Delhi: The public accounts committee (PAC) on Friday questioned top executives of Mukesh Ambani-led Reliance Industries Ltd (RIL) about cost escalations in the D6 block of the Krishna-Godavari (KG) basin and alleged contract violations.
Executive director and RIL board member P.M.S. Prasad and others, who were appearing for the first time before the parliamentary panel, made a presentation to the committee on the project and the reasons behind the increase in the cost. (read more)
PAC questions RIL executives on D6 cost escalation
New Delhi: The public accounts committee (PAC) on Friday questioned top executives of Mukesh Ambani-led Reliance Industries Ltd (RIL) about cost escalations in the D6 block of the Krishna-Godavari (KG) basin and alleged contract violations.
Executive director and RIL board member P.M.S. Prasad and others, who were appearing for the first time before the parliamentary panel, made a presentation to the committee on the project and the reasons behind the increase in the cost. (read more)
RIL gas output may decline further
Mumbai/New Delhi: At a time when the country is facing fuel scarcity, gas production from Mukesh Ambani-owned Reliance Industries Ltd’s (RIL’s) D6 field in the Krishna-Godavari (KG) basin may further dip to 22.6 million standard cubic metres per day (mscmd) in 2013-14, according to the Directorate General of Hydrocarbons (DGH).
RIL operates the nation’s largest gas reservoir off the eastern coast of India.
According to the projections, the current production of around 37 mscmd will dip to 27.6 mscmd in the next fiscal (2012-13), of which 20.2 mscmd will come from the D1 and D3 blocks and 7.4 mscmd from the MA fields in the KG basin. All these are counted as part of the D6 field. (read more)
Views | The fall in RIL’s natural gas output will hurt India
This one has all the ingredients of a potboiler. It involves one of the most prolific gas reserves discovered in India, playing an important role in the face-off between the two Ambani brothers, splitting the already divided Congress ruled United Progressive Alliance government into camps, claiming the career of former director general of hydrocarbons V.K. Sibal, and also in some ways leading to the exit of petroleum minister Murli Deora.
Gas production from the Mukesh Ambani-controlled Reliance Industries Ltd’s (RIL’s) D6 block on India’s eastern coast was supposed to lead to several benefits, including clean energy, huge public revenues, and a reduction in the oil import bill. The reality is turning out to be different. (read more)
PM hints at gas price hike
New Dellhi: In an indication of a likely increase in the price of gas from Reliance Industries Ltd’s (RIL’s) D6 field in the Krishna-Godavari (KG) basin, Prime Minister Manmohan Singh on Friday said his government had started gas pricing policy reforms to offer an incentive to producers of natural gas.
“We are conscious that remunerative energy prices are needed to ensure expanded energy supply,” Singh said at the 7th Asia Gas Partnership Summit 2012 in New Delhi. (read more)
March 30 12
RIL move for arbitration on KG D6 gas shot down by govt
New Delhi: In a blow to Mukesh Ambani-led Reliance Industries Ltd (RIL), the Union government has declined to join the arbitration proposed by the company to resolve the dispute over the recovery of cost for developing the D6 hydrocarbon field in the Krishna-Godavari (KG) basin.
Consequently, RIL will either have to challenge the government in court, or accept the petroleum ministry’s proposal to deny the $1.24 billion (around Rs6,343 crore today) in costs that it had claimed, a move that could potentially squeeze the company’s profit. (read more)
Niko slashes estimates for KG-D6 basin
Mumbai/New Delhi: The share price of Mukesh Ambani-promoted Reliance Industries Ltd (RIL) slumped after its partner in the D6 gas field in the Krishna Godavari (KG) basin, Canada’s Niko Resources Ltd, slashed the proven and probable gas reserve estimate from D6 by 78.55% to 1.93 trillion cubic feet (tcf), compared with earlier estimates of around 9 tcf.
RIL fell 2.5% to Rs 718.60 on the BSE on Thursday. The Sensex rose 0.8% to 17,032 points. This was the sharpest fall in RIL’s stock price after 1 June, when it lost 3.16%. (read more)
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First Published: Thu, Nov 01 2012. 02 40 PM IST
More Topics: RIL | KGD6 | CAG | KG Basin |
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