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Business News/ Companies / News/  ONGC’s annual report omits its infamous tiff with RIL
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ONGC’s annual report omits its infamous tiff with RIL

ONGC had claimed that RIL had been drawing gas from its adjoining hydrocarbon block in the KG basin

An ONGC official said the company has already drawn flak from the government for dragging it to court in the case and now it wants to play down the matter. Photo: BloombergPremium
An ONGC official said the company has already drawn flak from the government for dragging it to court in the case and now it wants to play down the matter. Photo: Bloomberg

Mumbai: India’s biggest state-owned company Oil and Natural Gas Corp. Ltd (ONGC) has omitted its controversial tiff with Reliance Industries Ltd (RIL) from its annual report for 2013-14.

ONGC had claimed that the private player had been drawing gas from its adjoining hydrocarbon block in the Krishna-Godavari (KG) basin. This had been one of the most controversial developments of the last fiscal, which saw ONGC lock horns with RIL over the issue. It took RIL to court in May this year along with the Directorate General of Hydrocarbons (DGH), the upstream regulator, and the government of India.

The annual report was released on 30 August.

“We are aware that we have not mentioned it in the annual report," said a top ONGC official, who requested anonymity. The official said the company has already drawn flak from the government for dragging it to court and now it wants to play down the matter.

“Till the time RIL is cooperating with us on the issue, we don’t want to go out and talk about it so much again," he said, adding that the case is now sub judice.

The issue emerged in public in October 2013 when news agency PTI reported that ONGC had written to the DGH claiming that RIL had been drawing gas from its adjoining deep-water block in the KG basin.

The deep-water fields in question are RIL’s D6 field (KG-DWN-98/3) off the east coast of India and ONGC’s KG-DWN-98/2 block, which is adjacent. While RIL has revised the recoverable reserves from its D1 and D3 fields in the KG basin to 3.4 trillion cubic feet (tcf) of gas, ONGC estimates its block holds 4.85 tcf.

It had said in the letter that RIL be asked to share data and jointly work in determining what has been the extent of gas drawn from ONGC’s block since 2009 and compensate it for the loss.

At that time, Sudhir Vasudeva, then chairman and managing director of ONGC, had played down the matter saying it is “being blown out of proportion" and that such situations emerge across several overlapping hydrocarbon fields the world over and all it required was to share data and establish the extent.

However, later in mid-May this year, in a petition filed in the Delhi high court, ONGC said RIL has drawn up to 18 billion cubic metres of gas since 2009, leading to a loss to the company of almost 30,000 crore.

In the petition, the company had also made the ministry of petroleum and natural gas and DGH respondents to the petition on the grounds that they had not taken preventive measures to protect the company’s interests.

The petition drew a stern response both from the government and RIL.

The government, in its affidavit filed in May-end, called the company’s allegations “frivolous" and much-delayed as gas production started from RIL’s block in April 2009. RIL, in a note released in May-end, said that all wells drilled by RIL during the development of its D1 and D3 fields were well within the blocks’ boundaries and approved in accordance with the production-sharing contract by a management panel consisting of government representatives.

The case, which was to be heard on 29 August, has been adjourned till January.

“We feel the purpose has been solved by raising the matter. Now let the court take its course," the official said, but admitted that the company might face a lot of questions from its shareholders, too, in the forthcoming annual general meeting (AGM) regarding the issue.

The company’s AGM is scheduled in New Delhi on 19 September.

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Published: 02 Sep 2014, 11:52 AM IST
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