iconimg Friday, August 28, 2015

Indo-Asian News Service
New Delhi, August 04, 2009
Anil Ambani-led Reliance Natural Resources Ltd (RNRL) on Tuesday once again said production at the D6 block in the Krishna Godavari (KG) hydrocarbon basin was being artificially curbed. Referring to comments by the oil regulator, the Directorate General of Hydrocarbons (DGH), an RNRL spokesperson said: "DGH's confirmation that current production is only 31 mmscmd against the maximum production capacity of KG basin at 80 mmscmd, owing to the absence of further market for gas, vindicates our stance that RIL (Reliance Industries Ltd) is curbing production to artificially justify its exorbitant prices, and there is no further demand at such high prices."

Anil Ambani's RNRL and elder brother Mukesh Ambani-owned RIL are fighting a bitter legal battle over the supply and pricing of gas from the fields off the Andhra Pradesh coast.

Even Petroleum Minister Murli Deora had said in parliament that the production from the field was 31 mmscmd as against the optimal level of 80 mmscmd, which he said the company will pump in a year's time.

RNRL said it was also "surprised by the directorate's comments that inflating the capex on KG-D6 does not benefit RIL".

"As per the PSC (power sharing contract), RIL is entitled to first recover its entire capital expenditure, before the government gets any meaningful share, and hence RIL has substantial motivation to claim higher capex."

The RNRL spokesperson said that, in other words, the more RIL claims to have spent on capital expenditure, the less the government would get as its share from the revenues.

Also, RNRL said, the timing when the government got the revenues would be further delayed.

"In the interests of transparency, and to set the matter at rest, the DGH should publicly disclose the full reports of the CAG, Indian experts, international engineering consultants, and independent auditors, referred to in the statement, including their identity and process of their selection, the terms of reference," the company said.

"One of the experts appointed by the DGH, P Gopalakrishnan, by his own admission in his report has not even studied the production sharing contract (PSC) between the government and the contractor."

It went on to add: "The DGH's comments on the role of the management committee gloss over the fact that the four-member committee has equal representation from the government and RIL - the conflict of interest is obvious."

RNRL said that contrary to the DGH's statement that India is a favoured destination for companies to invest in exploration and production business, "the fact is about 70 per cent of India's acreage under all NELPs is held by two domestic companies, of which RIL alone holds 35 per cent".

The RNRL statement said "the DGH's comments on an 'obsessive and endless public debate' were best avoided, as all comments are being made in the interests of enhancing the government's revenues by potentially up to Rs. 30,000 crore".