Reliance Industries (RIL) faced fresh problems on Tuesday with Niko Resources, its partner at the offshore KG D6 field, downgrading the quantity of the estimated recoverable reserves in its annual update.
Credit Suisse quoted figures from the update to say Niko has pushed down the proven plus probable reserves by 17% year-on-year at the KG D6 field and three other blocks. But the other blocks being much smaller, the cuts pertain largely to the flagship field of RIL.
The report closely follows a Comptroller and Auditor General (CAG) draft report critical of the oil ministry and its technical arm Directorate General of Hydrocarbons for allegedly favouring RIL by allowing it to double the development cost of the gas field.
The news pushed the stock down by 1.4% on Tuesday to R913.55. It has lost 11.76% since April, while the benchmark Sensex has lost only 5.7% in the same period.
In a press release on Monday night, the petroleum ministry said the draft performance audit report sent by India?s supreme auditor ?has been received in this ministry on 8th June, 2011. The ministry is examining the draft report (and) will prepare a reply to the audit observations after obtaining details from relevant agencies.?
The CAG report follows successive reports of downgrade in RIL?s gas reserves by agencies including the Directorate General of Hydrocarbons.
Agencies said petroleum minister S Jaipal Reddy on Tuesday met Prime Minister Manmohan Singh in this context. However, the minister?s office said the meeting discussed issues relating to the broad petroleum sector including the prevailing international oil market and the need for decontrolling diesel prices. Reddy refused to comment on his meeting which lasted just 15 minutes.
The CAG has sought oil ministry?s comments on the report so that it can be presented in the monsoon session of the Parliament. The audit was ordered by former petroleum minister Murli Deora in 2007 to inquire into allegations of RIL inflating the capital expenditure for the block. Oil ministry officials said it will take at least 5-6 weeks to file its reply to the report.