CAG Failed to Act Against Reliance When Everything Is In Public Domain??
February19, 2013
It appears from the News Reports that CAG DG of Audit of Petroleum Ministry has no information about RIL operations when ONGC, Oil India, GSPC PSUs had operations for many decades therefore had all the information but was ‘Paid to Do Nothing.’ I have accessed more Information than CAG, submitted CDs to the honorable PM and CBI as well CAG when CAG claims to know nothing.
In 2002 RIL promised to deliver Gas in 30 months but actually awarded Contracts in 2006.
RIL refuses to share spend details with CAG
Pradeep Thakur TNN
New Delhi: Comptroller and Auditor General (CAG) Vinod Rai has sought government’s intervention to ensure that it gets to investigate Reliance Industries Limited’s (RIL) claim to have spent more than Rs 25,000 crore for developing the D-6 gas fields in the Krishna-Godavari basin.
Rai last week wrote a letter to petroleum minister Veerappa Moily pointing out that a CAG team deputed to audit RIL’s expenditure claim was not allowed access to the company’s books. The private sector giant remained engaged with the CAG audit team, but refused to share details of the equipment worth thousands of crore it claims to have procured for developing the gas field since early 2007.
RIL justified the denial of documents and details by arguing that the top federal auditor did not have the mandate to ask for “propriety expenditure” of a private concern. CAG had wanted to know the sources from where RIL procured the machinery.
When asked about it, the petroleum minister sought to play the standoff down. Speaking on the sidelines of a GAIL function in Bengaluru, Moily said: “RIL is not the only party involved. They will do their job, CAG will do its job and the ministry will do its work.”
Rai’s letter to the petroleum ministry renews a running feud between the CAG and RIL over the former’s jurisdiction to review the expenses that the corporate behemoth says it has incurred for developing the gas reserves in K-G basin. RIL has justified its stand by saying that it was a private concern and, consequently, outside the CAG’s purview.
However, CAG has asserted its right to inspect the accounts by saying that they pertain to a production-sharing contract where government is a partner
CAG Fabricated 2G Losses vs $500b Real Production Loss
As per following Press Release RIL was to invest Rs.4800 crores in Infotel Broadband to acquire 20 MHz Spectrum for 4G services – against 4.4 or 6 MHz for 2G Services – but RIL claimed Correctly that its 4G license has ‘Greater Capacity Than Existing Communication Infrastructure in India.’
In spite of 100-1000 times higher Capabilities of 3G and 4G services CAG made out 2G auction to be Rs.1,76,000 crores SCAM.
Mumbai, June 11, 2010 --- RIL will invest about Rs 4,800 crore by way of subscription to fresh equity capital at par to be issued by Infotel Broadband. Post this investment, RIL will own 95% of the equity and Infotel Broadband will be a subsidiary of Reliance Industries Limited. A single 20 MHz TDD spectrum when used with LTE (Long Term Evolution) has the potential of providing greater capacity when compared to existing communication infrastructure in the country.
But strangely it reported today CAG couldn’t access RIL records.
Did CAG went in to records of Private Operators to conclude they had Indulged in 2G Scam?
For well over 4 years I have been reporting MEGA Scam in Hoarding and Inflating Capital Cost based on information in public domain.
At peak production of oil & gas, the KG-D6 facility is expected to produce over 550,000 barrels of oil equivalent per day. Production from the Dhirubhai 1 and 3 discoveries of the KG-D6 block will result in a quantum leap towards achieving India’s energy security. KG-D6 gas would also substantially reduce wealth transfer from India to other nations due to energy imports and bring down subsidy levels in the fertilizer, transportation and other sectors. Apart from the economic benefits to the nation, the impact of this gas will be significant in helping India in its climate change efforts and achieving a greener footprint.
At landed cost of $150 per barrel even at the 2005-6 design parameters RIL has designed system to produce $82.5m worth Oil Equivalent Gas everyday – this is $30b per year, RIL had made additional discoveries. Therefore annual production in Oil Equivalent was expected to be $50b.
$100b Loss Every Year
Gujarat State Petroleum Corporation too made similar discoveries – RIL and GSPC together were expected to produce $100b worth Oil Equivalent Oil & Gas every year.
It is important to clarify also One Natural Gas is cleaner than petroleum fuels and even LPG and Two has high calorific value therefore directly replace LPG.
CAG last year reported RIL was directly and indirectly drilling in to ONGC and GSPC owned Blocks though Deserve Praise.
RIL had taken on lease most powerful ‘Drilling Rigs’ but had not utilized them.
Once the discovery was made in 2002 RIL required Low Power Drilling Rigs because the wells were in Shallow or Low Depths.
Ravinder Singh
http://www.rediff.com/money/2002/oct/31ril.htm
Reliance gas-find 40 times bigger than Bombay High
Hemangi Balse in Mumbai
Reliance Industries' gas discovery in the Krishna-Godavari basin is expected to
change the energy supply economics in the country with the reserves estimated to
be around 40 times bigger than that of the Bombay High field, and double the total
gas production of Oil and Natural Gas Corporation.
The Ambanis made the announcement on the gas discovery at the company’s
annual general meeting on Thursday.
Reliance's gas reserves in its exploratory block KGDN-6, off Vishakapatnam, are to the tune of 40-50 million cubic metres per day and are expected to go up to 100
cubic metres of gas over a 10-year period.
Reliance's gas reserves are expected to feed the gas-starved country for almost a
century. The firm will have to invest more than Rs 7,000 crore (Rs 70 billion) in
extracting gas from the Krishna-Godavari basin.
Reliance is understood to already have received enquiries from several international oil majors for a partnership but is, however, planning to go it alone.
An industry source said: "If Reliance's projections come true, it will change the entire energy supply chain of the country. This will further mean that projects to import liquefied natural gas in the country will be hit."
Such a scenario puts a question mark on the slew of LNG terminals planned in India. Although most are on the drawing board, several global firms, including Shell, British Gas, and the local Petronet LNG, have bought land and carried out detailed feasibility studies to import LNG.
Reliance is delineating the gas reservoir, has drilled almost three wells, and needs
122 clearances at various levels of the government.
Though Reliance has a 10-year plan for the gas reservoir, the entire execution and commercial production is being chalked out in such a manner that it can commence production in two and a half years.
Reliance is the first private Indian company to have struck gas in a deep water
exploratory block in the country. It drilled a record 6,000 feet below the sea floor in
the Krishna-Godavari basin.
Scoundrels in Director General of Hydrocarbon (C)
KG D6 alone $200b Liability Already
Special Investigation – October08, 2009
Dr. Manmohan Singh,
Prime Minister of India,
New Delhi 110016.
Ref: - Reference DGH Full Page Ad. October07, 2009
Evidence DGH AR 2007-08 and RIL foreign competitors & Partners
Piper Alpha
Four companies that later transformed into the OPCAL joint venture obtained an oil exploration licence in 1972 and discovered the Piper Alpha located at xxxx in early 1973 and commenced fabrication of the platform, pipelines and onshore support structures. Oil production started in 1976 with about 250,000 barrels of oil per day increasing to 300,000 barrels (48,000 m3). A gas recovery module was installed by 1980. Production declined to 125,000 barrels (19,900 m3) by 1988. – Google/ wikipedia
Piper Alpha Offshore well started production in four years from exploration license when deep-sea technology was under development. How on earth DGH, RIL and Goldman Sachs could justify Nine years from license to production schedule for near shore wells in present times. – Ravinder
P-56 production Platform awarded in October2007 will be ready in three years 2010 is much heavier will cost $1.5b connecting 22 wells.
Executive Summary; -
1. RIL was awarded 3,41,359 sq.km Petroleum Exploration License (PEL) area but has developed only 339 and 49 sq.km of PEL area so far indicated by Manufacturing Licenses (ML) awarded on 2.03.05 and 17.04.08. This is just 1% of manufacturing license area of 35,601 sq.km awarded to all companies or 0.1% of PEL to RIL or 0.01% of sedimentary area.
· $9b Capitalization for 1% ML area or 0.1% of PEL or 0.01% of sedimentary area points to $trillions required to explore & develop Petroleum Sector.
2. Even after acquiring 70% of private PEL area, bidding since1999 RIL has not acquired own Deepwater Rig for developing 3,30,000 sq.km. of deep waters, available very cheaply then because it did have the skills to operate Drilling Rigs, Develop Wells and Lay Pipelines.
· We have a useless Commission Agent causing huge Economic Loss to India while minting money.
3. Out of 3.14 million square kilometer Sedimentary area, 2 million sq.km is under survey, 1.06 million under PEL but only 35,602 sq.km is under Manufacturing License – only a fraction of it is actually under commercial production. Less than 1% of PEL area is under development. Due to corrupt practices of DGH no Global Oil Major (like Petrobras, Exxon, BP.) was awarded PEL license under NEPL who have latest technology and resources to rapidly and economically develop petroleum and gas wells.
4. Shockingly out of 0.5 million sq.km PEL area given to private sector, RIL cornered 0.34 million sq.km or 70%, RIL was HOARDING on to resources, had no skills of its own, against $1b capitalization charged $9b and is running dispute with NTPC and Reliance Power. Petrobras for P-52 development platform world’s largest, 10 times bigger than RIL platform, cost just $0.8b.
5. RIL alone caused Oil Equivalent loss of $200b in 5 years of Hoarding KG gas alone. First well was drilled by RIL after two years of PEL, development and management contract was awarded to Bechtel in 2006, Gas Pipeline work was awarded to Chinese company 7 years after PEL. No other pipeline has been laid to extract East Coast gas production even 10 years after NEPL-1 and DGH expects all other PEL holders to use RIL pipeline as its subordinate.
6. Even more shockingly RIL was awarded 3,30,000 square kilometers Off Shore PEL area out of 3,41,359 (97%) when RIL has no skills no rig not even qualified to bid for NEPL.
7. Most of the prime off shore blocks next to coast line that need lowest exploration and development cost were allocated to RIL by Minister Ram Naik, NDA – deeper and distant blocks were left for other explorers hence no major Petroleum Developer was interested in India.
8. 1.18 billion people can’t believe RIL has not concluded any “Gas Purchase Agreement” with any major consumer in 9 years but Ram Naik, NDA awarded 70% of Private Sector PEL area to RIL.
9. In 2008-09 India imported $96b worth of petroleum – but for poor implementation of Petroleum Exploration Program at least $50b to $60b could have been avoided by RIL full scale production alone last year. (India ought to have attained self sufficiency in Oil & Gas Prodctio.)
10. 55% Indians don’t have access to electricity, Industry has installed 20,000 MW of diesel generators- many more home and small business generators and inverters add to high cost of generation, imports of petroleum and Green House Gases are serious concerns. Dabhol and many more Gas Power Generators operating at over substantially more thermal efficiency but were operated at half load due gas shortage.
11. PMO is hauled up for increasing CO2 emissions by G-20 Nations every time but DGH and RIL have together hijacked Petroleum Sector, Hoarding Gas that is relatively pollution free source of energy compared to oil and coal and more importantly Indigenous Resource.
CBI enquiry or Judicial enquiry by Supreme Court Judge is definitely warranted but first priority is to Rescind all agreements with RIL, Nationalize RIL and award 0.34 million sq.km PEL blocks to new bidders.
Details
Respected Dr. Manmohan Singh,
Nowhere in the world a Director General rank officer had FOOLED the Government so brazenly as V.K. Sibal.
This professional inventor has been researching different aspects of Petroleum Sector related to 5-6 years Delay in First Delivering KG Gas which is Hoarding and scaling up of Capitalisation by 10 times.
I am appalled a national agency critical for India’s development – Hydrocarbon is led by an absolute crook and scoundrel. I always believed Mukesh Ambani to be behind all the mischief but DGH full page advertisement confirms DGH full support for this scandal and V.K. Sibal as its mastermind.
I met V.K. Sibal at an Oil & Gas event 2-3 years ago and objected to the idea of taking KG gas to Gujarat through a pipeline, that already has biggest petroleum refineries and substantial gas production already, than forming a national grid and equitably distribute gas to energy deficient states particularly Punjab, Haryana, Delhi, UP depending heavily on coal supplies.
Three Important Features of Oil & Gas Development
Firstly an exploration well may discover $50b worth of gas or nothing at all. But it is commercially significant to take up full Development Plan on discovering even $500m worth of gas immediately. Why RIL took four years to award contract?
Secondly Off Shore Drilling Ships like, “Mosquito Biting Several People in Minutes Hovering From One To Another” Begin Exploration work very early and relocate to new site in hours therefore Off Shore petroleum exploration development was very critical for attaining self sufficiency in Oil and Gas production. RIL who acquired 70% of the Off Shore PEL didn’t even buy a drilling rig.
Thirdly these days unlike Piper Alpha Production or Control platforms, are prefabricated, assembled at site and anchored like tents over the wells. It takes less than 12 months of placing express orders. In one such case a platform was fabricated in two places in parts – one in Middle East and other in South America before assembly in Brazil for Petrobras.
Point wise Charge Sheet cum Rejoinder is framed on behalf of people of India, consumers of electricity who shall pay twice more for power including Industry and Residents in response to DGH full advertisement of October07, 2009.
Time Line –
1999 – NELP 1
April, 2000 KG Basin License to RIL and site handover June07, 2000.
Mid 2002 – First Drilling and Gas Discovery reported to be 25 trillion cubic feet.
2006 – Award of Management Contract to Bechtel. Later award of Riser & Control Platform with Scheduled completion June2008.
2007 – Gas Pipeline work to connect KG supplies to Hazira Junction.
April2009 Production commences.
April2009
(a) D-6 Capex Increased ---
P-52 Development Platform cost just $0.8b – RIL $9b
P-52 Development Platform of Petrobras cost just 0.8b which is 10 times larger than RIL control platform. Whereas P-52 is located over 60 kilometers away from shoreline KG D6 wells are just 20 km to 30 kilometer from shoreline.
· Since first discovery KG D6 was the BEST gas find in the world in 2002, this gas well ought to have been connected to shore based facility and Gas Pipeline commissioned within 12-15 months.
· From security and reliability considerations it was always preferred to have three systems of 40 MCM rating terminating on shoreline beginning 2003 than one 120 MCM rating system commissioned in 2009.
· East Coast Gas pipeline ought to have been awarded along with NEPL-1 license to GAIL in 2000 itself.
· DGH has brazenly FOOLED Government of India about the escalation of cost from $2.5b to $8.8b – fact is P-52 platform has 24 risers compared to 18 for KG D6 so DGH is trying to justify 10 times higher cost. Secondly against 2 feet pipe a 3 feet pipe cost just 25% more but carry up to three times more gas.
· Pumping of gas is required in On Shore Pipeline in KG D6 case. Gas could have been supplied to AP, TN, Kerala and Karnata and GAIL could have provided the pipeline but RIL was not interested in early supply of gas in 2003 itself.
· It was Deliberate Mischief of DGH to DELAY execution of KG D6 when oil prices hit $150 a barrel collaborating in HOARDING of gas.
(b.) Inflated expenditure can reduce Government revenue and delay revenue –
GOI has already suffered a loss of $200b in Oil Equivalent Petroleum imports that also require high cost refining and transportation.
DGH has passed on the inflated cost to consumers many times desirable expenditure and quadrupled RIL profits that meant fuel cost of power plants shall be Rs.2.50 per unit. GOI may take $18b from 10 tscf of KG Gas but Economy of India will suffer additional $200b loss due to Industry becoming uncompetitive.
(c) Capital Expenditure is ---
Capital expenditure has been deliberately inflated Petrobras contracted to buy 24 Rigs including many deep water for $2b for four year term but RIL offered to NTPC a single rig that will cost $1b in five years.
DGH deliberately Connived in Inflating Capex from $1b to $9b.
(d.) It is a unique case where contractor himself approves his own capital expenditure
Comments made by DGH are most lunatic and irrelevant in face of Oil and Gas contracts of competing companies who served RIL also freely availble on internet. Just Googly “P-52” one can get all the details.
(e.) Obtaining sanction of expenditure in Government requires a three tier appeoval mechanismof COS, CCEA and Cabinet. In contrast an approval happened without any scrutiny.
DGH admits here Management Committee of RIL approval was valid in KG D6 case. But RIL had never undertaken a Deepwater Oil and Gas development project before. And there is practically no competition. Annual Reports of contractors and their Press Releases indicate only $0.8b was the cost of P-52 platform.
(f.) CAG has been unable to access the accounts books and other details of RIL
Since this project was executed by foreign contractors, CBI, CAG need INTERPOL help in unraveling MEGA Fraud.
It is clear case of Fake Transactions and Money Laundering.
(g.) Gold plating of or dubious increase of capex would directly benefit the contractor as PSC permits the contractor to recover all the cost before sharing profits with the government.
RIL Contractor in quadrupling CAPEX has ensured $6b upfront profit on day one of commissioning of project (Havala players share not included). RIL Made it possible to Double or Tripling actual supply cost of Gas thus realizing $10.63b against say $4b. In all for an investment of under $1b RIL walks away with $16.63b profit.
More profits from KG D6 in case gas flows are 25 tcf as reported initially by RIL.
(h.) Gold plating of investment will increase gas prices
DGH argument that FREE market will determine gas price is SCANDALOUS.
i. Firstly DGH has ensured over 70% of private PEL were cornered by RIL,
ii. Secondly almost entire near shore blocks that involve lowest costs of exploration are grabbed by RIL.
iii. Thirdly RIL is deliberately HOARDING on to gas reserves.
iv. Fourthly no other pipeline is laid to evacuate gas from East Coast PEL.
v. Only 389 sq.ft of 341,359 sq.km PEL to RIL is under Manufacturing License.
There is thus No Competition.
(i) Capex determines the rate of return to government from the PSC. Government is not likely to get any return beyond 1% from this field.
DGH has again tried to FOOL government and people of India. High Court has already decided in favor of RIL and NTPC for $2.32 per mbtu rate. In case Supreme Court upholds the High Court order or Industry and Consumer demand for lower price of gas is accepted government will get nothing from KG D6 as well as any other well that is farther in to sea or on shore fields need acquisition of land etc.
From DGH own calculations revenue projections would come down to $20b from $38b and RIL has already capitalized $9 or $10b – rest of $10b will not suffice O&M expenditure over next 17 to 20 years.
DGH doesn’t understand that INFLATED CAPEX by 10 times also means INFLATED O&M Costs in proportion.
[DGH has provided revenue figures based on $4.2/mbtu rate of 38.30b, Profit Petroleum $25.30b, Net Government take $16.57b and RIL take $10.63b.]
Clearly it is most stupid of DGH to assume with Capex of $9b or $10b already O&M expenditure over next 17 years shall be just $3b or less than $200milion annually. Possibility is even at high cost of $4.2 per mbtu Government may not earn anything.
(j.) Capital expenditure is key to determine magnitude and timing of Government Revenue
It is again most stupid comment of DGH.
(1) Fact is GOI has practically earned nothing from NEPL auctions in 10 years – surely nothing from biggest gas discovery in the world KG D6 in 2002 up to April2009.
(2) If capex of $10b is accepted government will not earn anything in next 20 years also even at $4.2 per mbtu.
(k.) DGH appointed two experts ----- who have business relations with RIL.
DGH again pretended to be Stupid. DGH admits he has no capability of his own. The experts DGH engages are small players. But in the following Bloomberg Story clipping, at the peak of Oil Boom last year drilling rates was TEN times higher but PEL was awarded in April2000. KG D6 drilling was over in 2002.
Last Updated: May 15, 2008 14:09 EDT
CEO Gabrielli, 59, said Petrobras began signing multiyear drilling leases as far back as 2004 because it foresaw a shortage of deepwater vessels. ``We could get very good deals at that time,'' Gabrielli said. ``We moved some of our contracts from $70,000 a day to $250,000 a day, which seemed like a very large increase back then, but now, of course, drilling rigs are $600,000 and $700,000 a day.''
(l.) DGH stated that CAG audit has been ---
This an International Scam for RIL hired foreign contractors for KG D6 development. CAG can’t examine records of them so INTERPOL has to be involved to unravel the scam.
RIL Background
RIL has history of taking BAD decisions and then backing out of loss making contracts.
· RIL through Ram Naik avoided capital expenditure on Retail Outlets for petroleum products sold through PSU.
· Within months of opening 1200 outlets where RIL pre-contracted Fast Food franchises decided to shut down them all.
· RIL started exporting POL for some months when margins declined this year stopped exports of POL.
· RIL executed 30 million tpa $7b refinery from 2006 to end 2008 in record time but Hoarded on to Oil & Gas reserves in 3,30,000 sq.km area since 2000 – only 389 sq.km Manufacturing License area has been developed so far.
· RIL also cheated millions of farmers across India acquired their farmland cheaply and in 2005 told people of India RIL has contracted with 250 Fortune 500 Companies for SEZs.
· None of 250 Fortune500 has located in Reliance SEZ.
· RIL Retail is going nowhere either.
REMEDY –
India can’t allow Hoarding of its National Wealth in 3,30,000 sq.km of Offshore Blocks in prime location, capitalizing projects 9 times CHEATING people of India.
Loss from just one block is $200b in avoidable Petroleum Imports.
RIL doesn’t have the qualification, skills and intentions to develop any Oil exploration project.
RIL projects area under development be nationalized and Unexplored PEL area put up for Re-bidding.
INTERPOL should be asked to assist CAG/ CBI in unraveling the Gold Plating of Capex.
Ravinder Singh
Inventor & Consultant
INNOVATIVE TECHNONLOGIES AND PROJECTS
Y-77, Hauz Khas, NewDelhi-110016, India.
e.mail; ravindersinghy77@yahoo.com,
October09, 2009
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