<p>The Directorate General of Hydrocarbons (DGH), in reply to the Comptroller and Auditor General’s (CAG) first ever audit draft report on review of production sharing contracts in India, has asserted that relinquishing Reliance Industries Limited’s (RIL) gas field assets is not a likely solution for failure of a party in developing a reserve on time, and it is most certainly not in the best interest of the nation and its gas security problems.</p>
<p>DGH has stepped up in support of RIL saying that Reliance has invested significant time and money (almost USD 5.6 billion up till March and another USD 3.5 billion on 19 other discovery blocks) in developing prominent gas reserves of the country and renouncing its holding will lead to substantial loss to the nation and its economy, especially because of the fact that once a field has been canceled out, it may take up to ten years to re-develop the field through process of re-bidding by new players. At a time when the country faces the brunt of ensuring gas security, government cannot afford to inculcate such losses.</p>
<p>DGH has also requested CAG to consider a merit based approach in evaluating RIL’s stand as against an inflexible one, which fails to acknowledge any miscellaneous factor that may affect the process of gas field development. Dip in field pressure, rise in cost of technology and process and many such factors affect the expenditure incurred by an oil and gas field developer and are requisite considerations for evaluation.</p>
<p>CAG audit draft has also pointed towards high expenditure accounted by private partners and DGH has assured that will consider the point and take necessary actions towards any irregularities that may surface on further examination. For now, DGH will review matter further and present its review to CAG in a few weeks time.</p>