Reliance KG block decision based on DGH input: Ministry

The decision to allow Reliance Industries (RIL) to retain the entire 7,645 sq km KG-D6 block in violation of contractual obligations was based on the advice of the Directorate General of Hydrocarbons (DGH), the Petroleum Ministry has told the Public Accounts Committee.

Pointing a finger at the DGH for prompting it into taking “controversial decisions”, the Petroleum Ministry has said that it waived a key clause based on the advice of DGH. Under the contractual obligations, RIL had to relinquish 25 per cent of the KG-D6 block in 2004 and a similar area in 2006 but the DGH had concluded that hydrocarbon prospects extend over the entire block and therefore part-relinquishment was not necessary.

The DGH decision was an acknowledgement of RIL's view that hydrocarbon channels were spread over the entire block and thus the entire area should be considered as discovery area.

Interestingly, the DGH at that time was headed by V. K. Sibal, who is now under CBI scanner for taking controversial decisions to benefit RIL. The reply to PAC comes after the Comptroller and Auditor General (CAG) came down heavily on the Petroleum Ministry for going out of the way to provide “undue benefits” to RIL leading to loss to the public exchequer.

A committee headed by the then Additional Secretary in the Petroleum Ministry, S. Sundareshan, also upheld the DGH advice, the Petroleum Ministry informed the PAC headed by senior BJP leader Murli Manohar Joshi.

“The Ministry relied on the technical input of DGH, the competent technical body appointed by Government for exploration and production operations,” the Ministry said in a 140-page response. The Petroleum Ministry said it was not a member of Management Committee that on July 11, 2006, declared the entire KG-D6 block as gas discovery area. The Ministry came to be aware about the proposal when DGH informed the Ministry vide letter dated August 1, 2006, it said in its reply to PAC. The CAG had in its September 2011 report sharply criticised the Petroleum Ministry for not exercising adequate oversight and control over procurements done by RIL and allowing the private firm to retain the entire 7,645 sq km block in the Bay of Bengal in violation of the contract.