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Whiff of discord in gas find claim

New Delhi, June 28: The government is likely to convene an emergency meeting and discuss as to why the Canadian partner of Reliance Industries, Niko Resources, jumped the gun to announce a phenomenal three-fold increase in gas reserves in the giant D6 block.

Niko today said “An independent engineering report prepared by Gaffney, Cline and Associates at the end of fiscal 2006 has increased the estimate of gross original natural gas in-place for the D6 Block to 35.4 trillion cubic feet from 11.9 trillion cubic feet in the prior year as evaluated by oil auditor D&M, a 197 per cent increase.”

Reliance is the operator of the block with a 90 per cent stake, while Niko holds 10 per cent. The deep sea KG-DWN-98/3 block, or the D6, is in the Bay of Bengal off the Andhra Pradesh coast.

Director-general of hydrocarbons V.K. Sibal ' the meeting will be held under his aegis ' said it was essential to understand the circumstances behind Niko’s decision to announce the massive increase without taking the other consortium partners, including the government, into confidence.

The production sharing contract is explicit on the need to inform the government prior to an announcement. The directorate general of hydrocarbons (DGH) and Sebi have both categorically said operators cannot unilaterally release information on reserves.

The claims must first be verified by the DGH. This is also the global norm as such unauthorised announcements often boosts the company’s shares.

Sibal said the estimates must first be authenticated by a technical team of the DGH which examines the claims in the context of geological issues and drilling results.

Niko said Gaffney Cline has estimated 8.2 trillion cubic feet of reserves in block NEC-25, off the Orissa coast. It said six gas discoveries in the block in the Mahanadi basin have been declared commercial.

Niko said commercial development of the NEC-25 fields would commence from next year, with gas supply to Calcutta starting from early 2009.

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