Ministry of Petroleum & Natural Resources

Ministry of Petroleum & Natural Resources is strongly rebutting the allegations appeared in News Item dated 23 January 2017

A news item has appeared in the daily ‘The Nation’, dated 23rd January 2017 titled ‘Massive corruption by oil & gas companies unearthed, whereby with reference to audit paras, allegations of embezzlement of billion of rupees have been leveled against oil & gas companies. Ministry of Petroleum & Natural Resources is strongly rebutting the said allegations and it is clarified that these allegation are based on audit paras 2.4.1 (EWT Production) and 2.4.12 (No exploration activities in blocks) of year 2013-14. The audit paras are primarily based on misinterpretation of Rules of Audit. The paras are being discussed in PAC meetings. The PAC sub-committee-II in its meeting held on 6th September 2016 has already recommended settlement of paras 2.4.1 subject to verification of record by Audit. The said recommendations would be submitted to PAC for consideration.

2.         It may be clarified that the E&P companies in question were allowed production of oil and gas from their respective fields under rule 20(1) of the Rules 1986 and 2001 which allow the holder of the licence to extract test/ early production subject to government’s permission. Test/ early production was granted on technical reasons and subsequently leases were granted after fulfillment of certain conditions defined in E & P rules. Before granting leases, test production is adopted by E & P companies as a standard industry practice to ascertain reservoir size, production capability and number of wells required to drain out the reservoir.

3.         It is further clarified that the oil and gas produced from the fields was sold to government designated companies under discounted rates and royalty at the specified rate was paid. The production acquired during EWT was also accounted for determination of production bonus slab of the block. Social welfare, rent and other financial obligations are also being paid as per Policy/ Rules. Thus, the question of illegal extraction and sale of oil and gas by these companies does not arise. In fact early production helped in minimizing the gas shortages in the country and to that extent displacement of imported liquid fuels.

4.         With regard to exploration licences/ blocks, where no work has been done, it is clarified that Government has already revoked 14 licences and issued notices to 8 licence holders to remedy the breach of rules. Whereas in 4 blocks, the holders have completed the work, however, in 11 blocks there are security issues, which are hindering start of work.