RIL’s KG-D6 invest beyond approved limit: CAG audit
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The Mukesh Ambani-controlled RIL could have exceeded the approved investing range at its KG-D6 block & under-utilised the facilities the Comptroller & Auditor General of India scholar to have discovered in its audit of the company’s books.
The Mukesh Ambani-controlled RIL could have exceeded the approved investing range at its KG-D6 block & under-utilised the facilities the Comptroller & Auditor General of India scholar to have discovered in its audit of the company’s books.
In the performance audit, the management committee (MC) of the D1 & D3 fields in the KG-D6 prevent & the DGH have faced CAG heat for “not effectively regulating” the deficiencies on the aspect of the operator.
The management committee performs as an inspection body & has representation from the petroleum & natural gas ministry and Directorate General of Hydrocarbons (DGH), besides the companies that keep equity in the block. CAG also considers that the facilities in the block, set up at a huge cost, have been under-utilised due to a decreasing trend in production & non-drilling of wells. RIL has also been indicted by the auditor for shifting straight from the finding to the commercial production level at the D1 & D3 fields, without conducting the evaluation programs needed under the production-sharing contract.
As per to a ministry source, in an review memo given last month, the auditor has said: “Till March 2012, Reliance Industries Ltd (RIL) has incurred outgoings of $5.76 billion on growth of D1 and D3, against the MC-approved price of $5.20 billion dollars for Phase-I. MC and DGH are accountable for ensuring that price calculations are reasonable & realistic, but there is no proof that they confirmed it. There also were deficiencies in the current PSC, as it did not offer for DGH/government to effectively regulate the deficiencies on the operator’s part.” When approached, a Reliance Industries Ltd official rejected to comment on the problem.
Comptroller and Auditor General (CAG) have also said in the report that the operator drilled only 18 wells, against 22 required under initial development plan. It has included that the operator had not Phase-II growth works until Dec 2013. “It (the operator) had stated the development would be shut by 2015-2016, if improved field growth plan was not approved. It would, thus, appear that the operator has made the decision not to drill staying wells, making the govt with a fate-accompli situation.”
Following a request from the oil ministry, CAG has been auditing the KG-D6 investing from 2008-2009 to 2011-2012. The auditor’s report is to be tabled in Parliament. DGH, too, has experienced the heat over lack of evaluation plan. “It is not obvious how DGH had confident itself of Credibility of the growth plan, as well as the associated reports of reservoir reserves, production prices, growth and production costs, etc… in the deficiency of an assessment program,” the auditor has opined.
Looking into the financial part, the auditor has said on-shore terminal (OT) was designed at $827.68 million, against an approximated price of $550.87 million. And, due to lower production, 50 % of these facilities remained unutilised. About half the complete subsea-manifold facilities, set up at a cost of $80.19 million, against an approximated $70.81 million, were also unutilised, an official included.
Also, the 3 pipelines, set up at a price of $1,019.43 million, in compared to the $906.92 million estimated (one was set up with an investment of $182.73 million) are lying idle. CAG has also so called that different numerical data of gas supplies were reconciled by DGH.
The complete decrease in production from the KG-D6 block during 4 years to 2013-2014 was stood at 154 million standard cubic metres a day (mscmd). Compared targets approved earlier, the production decrease was 5 mscmd in 2010-2011, 28 mscmd in 2011-2012, 55 mscmd in 2012-2013 and 66 mscmd in 2013-2014.
Rate this! 1-5 starsThe management committee performs as an inspection body & has representation from the petroleum & natural gas ministry and Directorate General of Hydrocarbons (DGH), besides the companies that keep equity in the block. CAG also considers that the facilities in the block, set up at a huge cost, have been under-utilised due to a decreasing trend in production & non-drilling of wells. RIL has also been indicted by the auditor for shifting straight from the finding to the commercial production level at the D1 & D3 fields, without conducting the evaluation programs needed under the production-sharing contract.
As per to a ministry source, in an review memo given last month, the auditor has said: “Till March 2012, Reliance Industries Ltd (RIL) has incurred outgoings of $5.76 billion on growth of D1 and D3, against the MC-approved price of $5.20 billion dollars for Phase-I. MC and DGH are accountable for ensuring that price calculations are reasonable & realistic, but there is no proof that they confirmed it. There also were deficiencies in the current PSC, as it did not offer for DGH/government to effectively regulate the deficiencies on the operator’s part.” When approached, a Reliance Industries Ltd official rejected to comment on the problem.
Comptroller and Auditor General (CAG) have also said in the report that the operator drilled only 18 wells, against 22 required under initial development plan. It has included that the operator had not Phase-II growth works until Dec 2013. “It (the operator) had stated the development would be shut by 2015-2016, if improved field growth plan was not approved. It would, thus, appear that the operator has made the decision not to drill staying wells, making the govt with a fate-accompli situation.”
Following a request from the oil ministry, CAG has been auditing the KG-D6 investing from 2008-2009 to 2011-2012. The auditor’s report is to be tabled in Parliament. DGH, too, has experienced the heat over lack of evaluation plan. “It is not obvious how DGH had confident itself of Credibility of the growth plan, as well as the associated reports of reservoir reserves, production prices, growth and production costs, etc… in the deficiency of an assessment program,” the auditor has opined.
Looking into the financial part, the auditor has said on-shore terminal (OT) was designed at $827.68 million, against an approximated price of $550.87 million. And, due to lower production, 50 % of these facilities remained unutilised. About half the complete subsea-manifold facilities, set up at a cost of $80.19 million, against an approximated $70.81 million, were also unutilised, an official included.
Also, the 3 pipelines, set up at a price of $1,019.43 million, in compared to the $906.92 million estimated (one was set up with an investment of $182.73 million) are lying idle. CAG has also so called that different numerical data of gas supplies were reconciled by DGH.
The complete decrease in production from the KG-D6 block during 4 years to 2013-2014 was stood at 154 million standard cubic metres a day (mscmd). Compared targets approved earlier, the production decrease was 5 mscmd in 2010-2011, 28 mscmd in 2011-2012, 55 mscmd in 2012-2013 and 66 mscmd in 2013-2014.
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