CAG seeks pending information on KG-D6 block

With Oil Ministry not responding to its requests for information on Reliance Industries' KG-D6 block, the Comptroller and Auditor General of India has written a curt letter to it, reminding of the requisitions pending for months.

CAG, which is doing an audit of Block KG-DWN-98/3 or KG-D6 for the years 2008-09 to 2011-12, on March 25 wrote to the ministry with a list of audit requisitions pending for upto 21 months, sources privy to the development said.

The ministry has not responded to ‘ambiguity’ in fixation of gas price formula/basis for valuation of natural gas, performance of the flagging Dhirubhai-1 and 3 (D1&D3) gas fields in KG-D6 and RIL not completing committed minimum work programme, they said.

The list includes CAG's request dated July 2, 2012 for information on award of contract for laying of a 1,395-km pipeline by Mukesh Ambani-owned Reliance Gas Transportation Infrastructure Ltd for shipping KG-D6 gas from east coast to the west.

Other pending requisitions include tripartite agreement entered into amongst the gas consumers, RGTIL and RIL for sale of KG-D6 gas, marketing margin charged by RIL, report of Goldman Sachs on global oil and gas finding and development cost and information on transportation of gas through RGTIL.

Also, it requested for information relating to exploration activities in discovery area after July 2006 and information on upstream regulator DGH-prescribed discovery verification tests done on D-26, 30 and 31 gas finds in KG-D6 block, they said.

Officials in the ministry however said CAG had sought some information which is completely out of its audit purview like cost and contracts for laying the East-West pipeline by RGTIL.

RGTIL is not an affiliate of RIL and the government audit was concerned with cost incurred by RIL only uptil the landfall or delivery point of the gas which in KG-D6 gas is Kakinada in Andhra Pradesh.

The cost of laying a pipeline beyond the delivery point is not a contract cost and is recoverable from sale of oil or gas, thus not impacting government's profit share.

The CAG audit, they said, was ordered to verify cost incurred by RIL in KG-D6 block where the private contractor and the government share revenue. In case of a pipeline laid thereafter, there is no profit sharing with the government.

Also, the marketing margin charged by a gas retailer too is not a contract cost and does not impact government's profit petroleum, they said.

Sources said some of the information like valuation of condensate produced from KG-D6 block and its delivery, exploration within currently producing D1&D3 and MA fields in the block and information on DST for three discoveries was pending with the Directorate General of Hydrocarbons.

Image: RIL chief Mukesh Ambani; Photograph: Reuters