Oil hunt: CAG picks govt holes

The Comptroller and Auditor General (CAG) of India, whose findings last year triggered a major telecom scandal, has slammed oil and gas exploration giants in a new report that suggests irregularities by government officials that seemed to have aided private firms.

Apart from Reliance Industries, the government's independent auditor who enjoys constitutional status said, Cairn Energy, BG (the former British Gas) and others were lax or worse in meeting government conditions specified in production sharing contracts, resulting in huge revenue losses to the government that gets a share of the profits.

The CAG has questioned the role of the Director General of Hydrocarbons (DGH) and the Ministry of Petroleum and Natural Gas in supervising or approving key aspects of the contract administration.

"Contrary to the PSC, the MoPNG and the DGH facilitated the desires of the contractor (RIL)," said the CAG report in one reference.

The report also severely criticised the role of petroleum ministry and DGH for allowing a "backdoor "entry to Cairn India in exploring for fuel long after an expiry date.

This increased cost-recovery claims by R900 crore, eroding government profits, with extra benefits from 13 discoveries.