Hardy’s KG gas claim gets DGH’s goat

NEW DELHI: The directorate general of hydrocarbons (DGH) has challenged the authenticity of London-based Hardy Oil & Gas��� claim of having huge gas reserves in Reliance Industries-operated Krishna Godavari basin blocks ��� D-3 and D-9. Hardy Oil, which holds a 10% stake in each of the two blocks, recently announced gas reserve estimates in D-3 and D-9 at 9.5 trillion cubic feet (tcf) and 10.8 tcf, respectively. RIL, a majority partner in the two blocks, holds 90% interests.

The DGH has taken up the matter with market regulator Securities & Exchange Board of India (Sebi) and the London Stock Exchange (LSE) ���to expose the designs of Hardy Oil & Gas,��� DGH director general VK Sibal told ET.

In a letter to Sebi chairman CB Bhave, Mr Sibal said: ���The action on the part of M/s Hardy is indicative of a dubious attempt to influence share market sentiments in its favour.���

He said the LSE-listed company has only 10% stakes in the assets while RIL holds 90%. ���As they (Hardy) had access to the data, they circumvented established procedures��� for announcement of oil and gas discoveries, he said in the letter.

In an email reply to ET, Mr Sibal said a potential discovery is declared as a commercial discovery only after the examination of technical data by DGH. ���Estimates of hydrocarbons are also required to be vetted by the DGH before making a public announcement,��� he said.

An email query sent to both Hardy Oil & Gas and RIL didn���t elicit any response.

Hardy announced the reserve estimates on May 27 in London, based on a technical evaluation report on the resource potential of D-3 and D-9 blocks. The report was prepared by Gaffney, Cline & Associates, an international advisory firm for the oil and gas sector.

���It is premature to announce the discovery and quantum of gas, especially when there is no single well drilled in the D-9 block. These estimates are often inflated,��� an expert with oil ministry said, requesting anonymity.

The consortium of RIL and Hardy���s wholly-owned subsidiary, Hardy Exploration & Production (India), had bagged the D-9 (KG-DWN-2001/1) block in the third round of new exploration licensing policy (Nelp-III) and D-3 (KG-DWN-2003/1) during Nelp-V.