Reliance Industries has said regulatory issues continue to be a "big hurdle" in additional investments in its oil and gas fields as it awaits approvals for key expenditure that would help reverse decline in output at eastern offshore KG-D6 fields.
RIL said in an analysts’ presentation that it is awaiting the oil ministry's approval for the KG-D6 work programme and annual budgets, which are normally issued before beginning of a fiscal, for 2011-12 and 2012-13 financial years.
With gas output at three currently producing fields in KG-D6 block halving to less than 30 million cubic meters a day in the past two years, the firm is pinning hopes on developing 16 other finds in the same area to reverse the trend.
"Significant yet-to-be-developed resource base exists," RIL said, detailing proposals it has submitted for regulatory approvals.
It said approval was awaited for the revised development plan for D26 or MA oil field which was submitted earlier this year. MA field in the KG-D6 block contributes one-fifth of the current output of less than 30 mmscmd and fresh investment would enhance gas production.
Also, it would, in the current quarter, submit a revised development plan for D1 and D3 gas fields, the main producing area in KG-D6, to raise gas production. An integrated development plan for the remaining satellite fields would be submitted in the third quarter of 2012-13 fiscal, the company said.
"Regulatory issues continue to be a big hurdle in additional investments," RIL said in veiled reference to pending approvals including nod for budgets for two years.
The oil ministry had on July 17 stated that it had not approved annual spending because RIL had denied CAG access to its books during the second round of audit that was initiated a few months back.
CAG had "recommended withholding of sanction for annual work plans and budgets if access to records is denied to CAG", it had said in a statement.
CAG had submitted audit of KG-D6 for 2006-07 to 2008-09 to Parliament in September last year and RIL's "denial of access to records to the CAG was adversely commented upon in the previous audit", the statement said.
The official auditor had initiated the second round of audit of spending on KG-D6 block during 2009-10 to 2011-12 earlier this year and the company may have denied it access of its records during the latest scrutiny. But the oil ministry has been holding back approvals for annual budgets for even 2011-12 that was to have come before March 31, 2011.
"RIL and its partners look forward to early government approvals of the development plans to realize the full potential of the Indian upstream portfolio," it said.
