Oil Ministry’s approval to RIL’s plan to increase KG-D6 production

Oil Ministry approved Reliance Industries’ plans to imageincrease natural gas output from the flagging KG-D6 and agreed that CAG cannot do a performance audit of the company.

The Ministry agreed to RIL stand that an audit by the Comptroller and Auditor General of India (CAG) of its spending on KG-D6 block has to be a financial audit and not a performance audit.

Earlier, Oil Ministry had withheld approvals to RIL’s investment plans by putting a condition of holding second round of CAG audit of KG-D6 field for 2008-09 to 2011-12.

What is RIL stand on the issue?

  • RIL is ready for a CAG audit if done under the Production Sharing Contract (PSC) which allows checking of the contractor’s accounts in order to verify the charges and credits but not questioning efficacies of processes or technology used in the complex deep sea operations.

How this decision will affect RIL?

  • After this action, RIL can take urgent remedial measures at KG-D6 where output has plummeted by more than 55 % in past two years to about 26 million standard cubic meters a day.

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