DGH to compute compensation in ONGC-RIL gas dispute

The oil ministry entrusted the DGH with calculating the monetary value of the gas that flowed from ONGC’s field in the KG basin to the adjacent one owned by RIL


The oil ministry is expected to examine internally as suggested by the Shah panel why ONGC has not made much progress in commencing production from the Godavari production mining lease.
The oil ministry is expected to examine internally as suggested by the Shah panel why ONGC has not made much progress in commencing production from the Godavari production mining lease.

New Delhi: Oil ministry has asked upstream regulator the Director General of Hydrocarbons (DGH) to quantify the amount that a panel said Reliance Industries Ltd (RIL) should pay the government for alleged “unfair enrichment” accrued to it while producing gas from a deepwater block in the Krishna Godavari basin.

The ministry entrusted the DGH with calculating the monetary value of the gas that flowed from state-owned Oil and Natural Gas Corp.’s field in the basin to the adjacent one owned by Reliance after the Justice A.P. Shah committee that reviewed the dispute between the companies left it to the government to figure out.

A person privy to the development, who asked not to be identified, explained that the DGH was only mathematically calculating the monetary value of the gas that flowed to Reliance’s field, which does not involve any decision making by the government or the regulator.

“The report of the consultancy jointly hired by the companies had in 2015 quantified the amount of gas that flowed from ONGC’s field to RIL’s at different points in time. The Shah panel endorsed it. The DGH has to only calculate its value in monetary terms taking the price of gas that prevailed at the time,” said the person.

Emails sent to ONGC and Reliance remained unanswered at the time of publishing.

DeGolyer and MacNaughton, the US-based consultancy had in its November, 2015 report said that between 1 April 2009 and 31 March 2015, more than 11 billion cubic metres (bcm) of gas had flowed from two discoveries of ONGC to Reliance’s adjacent KG D6 block, out of which nearly 9 bcm of gas has been produced from KG D6.

Justice Shah had said in his report submitted to government on 31 August that the government should quantify the ‘unfair enrichment’ and that whatever benefit the company received in terms of the migrated gas was liable to be returned to the government of India. The committee did not recommend any compensation to ONGC, which it said had no ownership rights over the natural resource.

The hallmark character of ‘doctrine of unjust enrichment’ is that liability for restitution would arise although there may be no wrongdoing at all on the part of the beneficiary, said New Delhi based lawyer Manoj Sasidharan.

The ministry is also expected to examine internally as suggested by the Shah panel why ONGC has not made much progress in commencing production from the Godavari production mining lease, said the person quoted above.

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