KG Basin dispute: ONGC denies it delayed reporting RIL issue

State-run firm contests A.P. Shah panel’s claim that it waited six years to report suspected links between its field, RIL’s


A file photo of ONGC chairman D.K. Sarraf. Photo: Bloomberg
A file photo of ONGC chairman D.K. Sarraf. Photo: Bloomberg

State-owned explorer Oil and Natural Gas Corp. Ltd (ONGC) on Thursday contested the justice A.P. Shah committee’s observation that the company took six years to report its suspicion that its gas field in the Krishna Godavari Basin was connected to the neighbouring field of Reliance Industries Ltd, the subject of a dispute referred to the one-man panel.

ONGC chairman D.K. Sarraf told reporters that the company did not know that the reservoirs of the two blocks were connected before 2013, the year in which the company approached the Director General of Hydrocarbons (DGH), the upstream regulator.

“We had put argument before the Shah committee that we had no prior knowledge whatsoever about flow of gas between the fields. But there is no mention of our submission in the panel’s report,” Sarraf told reporters at a briefing after ONGC’s annual general meeting.

While the Shah panel, appointed by the government as instructed by the Delhi high court last year, did not draw any final conclusion on the companies having prior knowledge of their fields’ connectivity, it observed that ONGC “had some form of prior knowledge about possible continuity in 2007, but did not act promptly or with due diligence, and took up the matter only six years after it first obtained relevant information”.

Sarraf said that once ONGC found out about the fields’ connectivity, it promptly took action. “It’s not easy to make the kind of allegations that we made, against a private company,” he added.

The panel also observed, citing a 2003 appraisal report on the oil field, that RIL had prior knowledge about connectivity and continuity of reservoirs, but it appears that “RIL did not bring the contents and findings of the 2003 Appraisal Report to the notice of DGH.” An email sent to RIL remained unanswered at the time of going to press.

RIL is expected to respond to the observations of the panel after studying the report.

Petroleum minister Dharmendra Pradhan told Mint in an interview on 2 September that based on the quasi-judicial panel’s report, the government will take action on the dispute by the end of this month.

ONGC claims that between 1 April 2009 and 31 March 2015, about 11 billion cubic metres (bcm) of gas migrated to KG D6 from adjacent fields, of which 8.9 bcm was appropriated by RIL, the panel said, citing a report by DeGolyer and MacNaughton, a US-based consultancy hired by the firms that had earlier confirmed flow of gas from ONGC’s field to RIL’s.

Sarraf said that ONGC was in talks with Gujarat State Petroleum Corp. Ltd regarding a possible acquisition of a stake in the latter’s assets in the KG basin. “We did some technical study. After that, we decided to appoint a technical consultant to further evaluate the field,” he said.

An email sent to GSPC remained unanswered at the time of going to press. An external spokesperson for the company said it would be able to respond only on Friday.

Houston-based consultancy Ryder Scott Company Lp will review the reserves estimates in the 1,850 sq. km block in the Bay of Bengal.

On Wednesday, ONGC reported a 21.14% fall in net profit for the first quarter of 2016-17 to Rs.4,233 crore, primarily on account of lower crude oil prices. During the quarter, gross revenue fell 21.41% to Rs.17,784 crore from a year ago.

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