REUTERS - BP
The D6 block in Krishna Godavari basin, jointly operated by the two energy companies, was expected to contribute up to a quarter of the gas supply for Asia's third-largest economy, but its unforeseen decline in output has left India more dependent on expensive liquefied natural gas (LNG) imports.
CAG had last year criticised the government as well as Reliance over development of the KG gas field, which has been beset by arguments over spending and strategy for its complex geology.
"It was ... brought to (the companies') notice that CAG (Comptroller and Auditor General) recommended withholding of sanction to work plans and budgets if access to records is denied to CAG," the statement said on Tuesday, referring to a meeting between the companies and the ministry on July 13.
Media reported earlier in the day that Reliance and BP had said at the July 13 meeting that D6 would stop producing in 2015 unless the government approved investment plans.
The ministry has asked BP and Reliance to share all the records and accounts of the D6 block with the federal auditor, the statement said.
The gas output from the D6 block was projected to decline to 20 million standard cubic metres a day (mscmd) in 2014/15, less than half the 60 mscmd it produced in 2010 and well below planned peak capacity of 80 mscmd.
The oil ministry also said it would recommend that the upstream regulator declare finds in some wells in the D6 and in nearby Mahanadi basin as commercial and would expedite approvals for two blocks in the Cauvery basin in the east coast.
Reliance holds a 60 percent stake in the D6 block, while BP has a 30 percent share it obtained in a $7.2 billion deal in 2011.
Canadian group Niko Resources
(Reporting by Nidhi Verma; Editing by Jo Winterbottom and Jane Baird)