The Hindu Business Line : DGH approaches SEBI again for norms in declaring oil finds

The recent communication of the DGH was in response to the SEBI's letter to the Ministry of Petroleum and Natural Gas, asking it to work out a mechanism for companies to announce new discoveries.

New Delhi , Sept. 13

THE Directorate General of Hydrocarbons (DGH) has again approached the Securities and Exchange Board of India (SEBI) for a meeting to discuss the norms for announcing the new oil discoveries and in-place reserves by Exploration and Production (E&P) companies.

The DGH had earlier approached SEBI in April this year for a meeting for the purpose.

The recent communication of the DGH was in response to the SEBI's letter to the Ministry of Petroleum and Natural Gas, asking it to work out a mechanism for companies to announce new discoveries.

Even before the ongoing controversy on whether the DGH can been on the board of Oil and Natural Gas Corporation (ONGC) or not could have subsided, the DGH found itself reportedly drawn into another battle of words — this time with the capital market regulator on the announcement of new gas discovery by the ONGC.

ONGC had recently announced a significant discovery in Krishna-Godavari basin, where in-place reserves of the order of 6 trillion cubic feet (TCF) have been mentioned, DGH said in its letter.

As per the existing norms, the announcement of discoveries or new significant finds should be made public only after the parameters given in the Production Sharing Contract (PSC) signed between the Government and various E&P companies/joint ventures, including ONGC who are operating in India, according to official sources.

So far, as per DGH, ONGC has not informed the discovery to the management committee of the concerned PSC, while the news has been revealed to the press.

Due to accelerated E&P activities in the country, companies have been making claims on new discoveries, without complying with the existing disclosure norms.

Although a policy on discovery is well defined in the PSC signed between the companies and the Government, the DGH, additionally is in the process of formulating a uniform policy on `classification of reserves and detailed guidelines for declaration of a significant discovery,' official sources said.

The claims made regarding the size and volumes of hydrocarbons contained in discoveries could mislead the investors, official sources said.

They added that to prevent companies from making such announcement DGH has formulated guidelines for declaration of discoveries.

The new guidelines are to direct companies to make declarations of significant discovery only after detailed technical appraisal of the discovery with prior Government nod.

It also stipulates that only proved estimates made in the hydrocarbons in-place may be declared, and the detailed technical information related to significant discovery may be submitted to Government for approval seven days before the intended date of declaration.

This is to avoid speculatory announcements or inflated figures, sources said.

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