OREANDA-NEWS. August 23, 2011. Cairn India has found an unlikely friend in Reliance Industries . In a letter dated August 11, the Mukesh Ambani-led firm has defended Cairn on the interim findings of the Comptroller and Auditor General of India (CAG) draft report.

The CAG had alleged that both Cairn and RIL had caused huge losses to the exchequer by retaining extra area of their blocks. Cairn had got an irregular extension of 1708 sq km in Rajasthan and Reliance had got additional area at the KG-D6. (Do read: Reliance replies to CAG observations on KG-D6 gas field ) CNBC-TV18's Nayantara Rai reports in detail.

Justifying why Cairn should be given this additional area, Reliance said that India has 200 blocks are under exploration but only two companies (RIL and Cairn) have been successful while other global majors including ONGC, Shell and Chevron walked out. RIL says there's every reason to allow it as well as Cairn to explore further.

The oil exploration major goes on the say that the government would have been shortsighted had it auctioned the additional area and not given it to Cairn, especially since Cairn went on to establish discoveries in the that area.

RIL and Cairn have made spectacular discoveries between 2001 and 2005, the letter pointed out. It also stated that India's top auditor never sought information on the July 12 exit conference. "The CAG has not taken on record any of the presentation made by the company in the exit conference, or of the two letters we had earlier sent to the CAG."