MUMBAI (Reuters) ? Energy major Reliance Industries said on Friday there was no evidence to suggest that costs in development of the country's key natural gas field in the Krishna Godavari (KG) basin were overstated.
The Comptroller and Auditor General (CAG) has criticised Reliance and the government over development of KG D6 basin and called for revamping profit sharing arrangements from oil and gas blocks.
The offshore KG basin was expected to contribute up to one-quarter the gas supply for India, but lower-than-expected output has left the energy-hungry nation more dependent on expensive, imported LNG to fuel power and fertiliser plants.
Global consulting firm Ernst & Young found no evidence suggesting KG D6 costs were overstated in purchases from third parties or from related parties, Reliance said on Friday, a day after the auditor submitted the report to parliament.
The KG D6 project was completed in a timely manner despite hostile weather conditions and significant supply chain constraints, Reliance said.
"The KG D6 project faced considerable physical and execution environment challenges as well as difficulties faced in the E&P capital projects market," it said, citing findings of IPA Inc, an independent project evaluation consultant.
The auditor's report had said Reliance, the operator of the KG-DWN-98/3 block, was allowed to violate terms of its production sharing contract.
The auditor does not have prosecuting power, but its findings can form the basis of any possible government action against Reliance, as well as future policy on exploration.
(Reporting by Sumeet Chatterjee; Editing by Aradhana Aravindan)
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