Reliance operated KG-D6 block’s accounts not audited for last 3 years
06 Dec 2011
The management committee, comprising oil ministry officials and executives of global oil major BP and Reliance Industries, that oversees the operations of the KG-D6 block, has not adopted the audited accounts of the gas field for the last three years.
This has lead to speculation that the non-approval of the accounts has direct bearing on the government's demand for a fresh assessment of the D-6 gas reserves.
The committee is also sitting on the budget of $242.65 million (revised estimate) for 2010-11 since December 2009.
Oil industry sources, however, say such delays are common in oil and gas sector auditing worldwide as adoption of accounts for bigger blocks, which involves lots of checks, verifications, and issues of jurisdiction, could take two to three years.
''In the case of D6 Block, the drop in output from the producing fields and delay in getting approvals has put strain on investments. The operator is unable to make fresh investments,'' says an oil industry official.
Reliance Industries has already invested close to $5.69 billion in the D-6 blocks, including in facilities. So far five gas fields have been discovered in D6 block. Of this, two (D-1 and D-3) are producing. At the recent management committee, commerciality of the Dhirubhai-34 gas fields was agreed upon.
According to Reliance, the investment made in the production facilities has been only partly recovered and the return on the investment so far is less than the cost of capital.
