The Hindu Business Line : <I>Reliance ready for Govt audit of KG basin potential </I>

Mumbai April 7 Reliance Industries, which has firmed up plans to invest up to $10 billion (about Rs 45,000 crore) in the KG basin, including pipelines for supply, has said that it is open to independent audit for assessment of the total gas potential in the basin.

The company believes this would put to rest both observations by some critics and provide insight into the gas potential. The President and Chief Executive Officer, Petroleum, Mr P.M.S. Prasad, said: "we have firmed up plans for big investments and are at advanced stage of execution. This alone vindicates the firm belief we have on the potential of total gas in the basin."

Speaking to visiting journalists from Hyderabad at Petroleum House in Mumbai, Mr Prasad said, "let the Government appoint a most stringent global auditor from anywhere in the world. We would be happy to have them audit the potential. For Reliance, such issues have always been questioned and each time we have proved our critics wrong."

The announcements Reliance had made about the total gas find in the region is based on a detail assessment of the well and estimates drawn over a period of six months of actually finding the gas.

These announcements conform to all the regulatory issues including that of the Securities and Exchange Commission (SEC) of the US, he said.

Asked if the gas pricing mechanism could be brought down, Mr Prasad said the oil price was market driven and wanted to know if one country could regulate the price of a commodity that is sold globally. "We would be happy to have a regulatory authority. But the thought of regulating and controlling the price of a commodity like oil and gas needs to reconsidered."

Mr Prasad countered why crude was priced at $60 a barrel when the cost of production is about $3-4 per barrel in some fields in Saudi and a little more in some others. He asked why the Government was not able to control the price of oil supplied by ONGC even though the production cost is say about $5-7 per barrel.

"We believe that the pricing has to be competitive and companies need marketing freedom," he said.

On administered pricing mechanism and the Rs 73,000-crore subsidy, which the state-owned oil and marketing companies enjoy, Mr Prasad said this was one of the reasons why private players like Reliance, Shell and Essar have reworked their retail plans.

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