DGH wants Sebi to act against Cairn Energy

The dispute between Cairn Energy and the Directorate General of Hydrocarbons (DGH) over the company's upgrade of oil and gas reserves of its Rajasthan blocks has escalated to a new level.

The DGH has approached the Securities and Exchange Board of India (Sebi) for "necessary action" against Cairn. The company had earlier announced its plan to file a draft red herring prospectus for an IPO by September 25.

Asked about the DGH's move, a Cairn spokesperson said it was "very difficult for any company to comment on the contents of a letter it has not seen. Cairn, at all times, aims to satisfy the requirements of all the regulatory authorities."

The DGH has objected to Cairn announcing enhanced reserves of 3.4 billion barrels of oil equivalent from its Rajasthan field, without keeping Indian authorities in the loop.

The sole competent authority to vet reserves of blocks in the country is the DGH "" the upstream regulator. The announcement of higher reserves, certified by international firm DeGolyer & MacNaughton, was made earlier this month in London.

In its letter to Sebi, the DGH said: "In the block RJ-ON-90/1 in Rajasthan, Cairn Energy India Ltd till date has notified 15 discoveries to the Indian government. Out of all discoveries made in the block, development plans for only four with a total oil originally in place (OOIP) of 1.16 billion barrels have been approved by the management committee (MC). Additionally, commerciality for two more discoveries have been agreed by the MC for an OOIP of about 274 million barrels."

Since the "remaining discoveries are at various stages of appraisal and are under evaluation by the operator, the in-place reserves for these discoveries have not been approved," it said.

The Cairn spokesperson, however, said, "The figures presented to the London Stock Exchange were available on the company's website, in accordance with the regulatory requirement".