New Delhi, Aug 25 :     The Institute of Chartered Accountants of India (ICAI) has formed a group to formulate accounting standards for oil and gas producing companies. At present, oil exploration companies in the country follow the Financial Accounting and Reporting by Oil and Gas Producing Companies in the US. ?Keeping in mind the unconventional accounting of this industry and the fact that many Indian and multinational players have shown an interest in oil exploration, the Oil and Natural Gas Corporation (ONGC) has requested us to formulate accounting standards for the oil industry per se,? said ICAI officials. The study group, which will consist of leading chartered accountants and members of the oil industry, will prepare guidance notes on the issue. The guidance notes will be circulated in the oil industry to elicit its response before being finalised. Explaining the unique situations faced by oil and gas exploration enterprises, ICAI sources said that unlike other industries where the value of an asset equalled its costs during the time of its acquisition, in oil and gas exploration, the underlying value of oil and gas reserves had no correlation with the cost of exploration. Further, the exploratory business, including offshore leases, bore the risks of non discovery of reserves in any particular location, hence most expenditures produced no assets. In fact, the sector is capital intensive, with the value of discoveries being recognised over time, as hydrocarbons are produced long after the economic event giving rise to them has taken place, sources said. The sector is also highly regulated, with the government giving the rights for exploring mineral interests. ?All these factors will be taken care of, while preparing the guidance notes,? said sources.