Oil regulator director-general of hydrocarbons has complained to market regulator Sebi against UK-listed Hardy Oil and Gas' 'unethical and premature' announcement of natural gas reserves in Reliance Industries' Krishna Godavari Basin blocks.
DGH director general V K Sibal objected to Hardy, which holds 10 per cent stake in RIL-operated D3 and D9 blocks, making 'an unwarranted, unethical and premature announcement that is bound to mislead' and influence share price.
Sibal on May 29 wrote to Securities and Exchange Board of India chairman C B Bhave asking the market regulator to take up with its counterpart in London the unauthorised statement made by Hardy about its assessment of reserves in the two blocks.
Blocks D-3 and D-6 may hold as much as 9.5 trillion cubic feet (Tcf) and 10.8 Tcf of gas reserves respectively, Hardy said in a statement on May 27 citing estimates by independent consultant Gaffney, Cline and Associates.
Sibal said the reserves had not been vetted by DGH before the announcement was made and could influence share prices.
The action on the part of London Stock Exchange-listed Hardy Oil and Gas 'in indicative of a dubious attempt to influence the share market sentiments in their favour.'
He suggested Sebi to 'take up with the London Stock Exchange to expose the designs of Hardy Oil and Gas.'
Being a minority partner, Hardy has access to the block's geological data. "They (Hardy) have circumvented standard, established procedures for announcement of oil/gas discoveries."
DGH has laid down guidelines for announcement of discoveries, Sibal said.
"A potential discovery is declared as a commercial only after the technical data is examined and verified by the upstream regulator, DGH. Estimates of hydrocarbon are also required to be vetted by DGH before making a public announcement," the letter posted on DGH website stated.
"DGH has observed that the reserves estimates surreptitiously provided by the companies to the press are often inflated. Such false information. . . might affect market sentiments in favour of the company and its shareholders," he wrote.
"This is an unethical and unacceptable practice that needs to be curbed firmly."
Sibal said an effective system of governance needs to be put in place as has been adopted in some countries. "In certain countries, the company's directors are held accountable if such unauthenticated information reaches the media."
Stating that well-established procedures and guidelines have been formulated for disclosure of discoveries, he said a potential discovery is declared as a commercial discovery only after the technical data is examined and verified by the upstream regulator, DGH.
