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Journalism of Courage
The Reliance Anil Dhirubhai Ambani Group (ADAG) on Wednesday questioned the credibility of audits commissioned by the Directorate General of Hydrocarbon (DGH). After its blistering attack against the petroleum ministry for being biased,ADAG came down on director general of hydrocarbons VK Sibal,saying that an independent consultant,P Gopalakrishnan,and a firm appointed by DGH to verify the KG-D6 development cost had conflict of interest with Reliance Industries Ltd.
According to Chalsani,RILs capital expenditure for development of Dhirubhai 1 and 3 gas fields in the KG-D6 block had increased from $2.47 billion proposed in 2004 to $8.8 billion in 2006,while production only doubled to 80 million standard cubic meters per day (mmscmd). Further,he noted that when production doubles the cost does not double factoring the economics of scale.
DGH had on Tuesday said that the increase in D6 capital expenditure was warranted as production facilities were increased from 40 mmscmd to 120 mmscmd and field life was increased from 9 years to 13 years. However,Chalsani claimed that due to the inflated capex the government stands to lose Rs 30,000 crore revenue as RIL is entitled to recover the entire cost before sharing revenues with the government.
But Sibal said the cost of production for Dhirubhai 1 and 3 fields at the approved field development cost of $ 8.836 billion came to $1.28 per million British thermal unit (mmBtu). This compares to the $1.25 per mmBtu cost of production of gas from Tapti field operated by BG Group of UK and $1.12 per mmBtu cost of gas production from Hazira field of Niko Resources of Canada. The D6 cost of production was lower than $2.86 per mmBtu cost of producing gas of ONGC and $1.59 per mmBtu of Oil India Ltd. With agencies
