Coming on the back of the declining output from the KG basin gas fields, the Directorate General of Hydrocarbons (DGF) is learnt to have refused to approve the spending plan of Reliance Industries Ltd. (RIL) for the KG-D6 gas fields unless the company drills more wells.

The DGH has been holding back approval for RIL's 2010-11 budget for several months. The Comptroller and Auditor General (CAG) is already carrying out an audit of the RIL's KG oil and gas field investments and is expected to submit its report during the monsoon session of Parliament. Mukesh Ambani-owned RIL had submitted revised spending on the eastern offshore KG-D6 block for 2010-11 along with the proposed budget for the current fiscal but the DGH sent it back seeking a recast, official sources in the Petroleum Ministry said. The DGH is understood to have asked RIL to include cost of drilling of two more wells on the Dhirubhai-1 and 3 gas fields — first of the 18 gas discoveries that have been put into production, in the budget. This despite being told that expenditure on additional wells would be a drain as they would be tapping the same pool of resources.

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