The Comptroller and Auditor General of India has noted that the financials of the eastern offshore block of Reliance Industries and its partners may get affected if the Ministry of Petroleum & Natural Gas accepts the third party report which concludes reservoir continuity with adjacent fields in the basin belonging to ONGC.

The affected financials would be profit petroleum, royalty and taxes since April 2009 when Reliance Industries and its partners Niko Resources and BP Plc started commercial production from their KG-DWN-98/3 block, according to the CAG Report titled ‘Union Government (Civil) Compliance Audit Observations’ tabled in the Parliament on Tuesday.

The government auditor has noted that that the total financial impact of cost recovery during 2012-14 was $1.547 billion. However, this may be affected if the Ministry accepts the report of the independent expert DeGolyer & MacNaughton (D&M).

ONGC’s Godavari PML and KG-DWN-98/2 are adjacent to the KG-DWN-98/3 block.

“The (D&M) report indicates that as on March 31, 2015, of the gas initially in place, 49.32 per cent in Godavari PML and 34.71 per cent in KG-DWN-98/2 (Cluster I) had migrated of which 85.15 per cent (pertaining to Godavari PML) and 73.25 per cent (pertaining to KG DWN98/2) was produced through DI-D3 fields of KG-DWN-98/3 block,” the CAG said in its audit findings.

The D&M report is currently under consideration by the Justice A P Shah Committee of the Ministry of Petroleum and Natural Gas.

The Justice A P Shah Committee will recommend future action of the government by considering the legal, financial and contractual provisions of the production sharing contract.

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