New Delhi: Oil minister Dharmendra Pradhan said on Thursday that his ministry was assessing the actions of former officials at Oil and Natural Gas Corp. Ltd (ONGC) and upstream regulator, the Directorate General of Hydrocarbons (DGH), since 2007 relating to a dispute between the state-run company and Reliance Industries Ltd around flow of gas between their connected reservoirs in the Krishna-Godavari basin.
Once the assessment is completed, the ministry is expected to bring provisions to penalize energy firms for not disclosing all material information to the regulator at various stages of field development and give DGH more enforcement powers and technical expertise.
Also, the ministry may take action if any individual official is found guilty of suppressing relevant information.
These measures were recommended by the single-member justice A.P. Shah committee that looked into ONGC’s claim that Reliance gained by producing gas from their connected reservoirs.
“There must be clarity on what roles the stakeholders played (relating to the dispute.) We should have transparency. We are making an internal assessment. We will bring to light whoever is responsible,” Pradhan said at the economic editors’ conference in the capital.
The Shah panel also said that the government should probe ONGC’s alleged long periods of inactivity in developing the blocks awarded to it.
ONGC chairman and managing director D.K. Sarraf said on 8 September that the company came to know that the reservoirs of the two companies in the KG basin were connected only in 2013, the year in which it approached the DGH on the issue. Sarraf also said then that the company had informed the Shah committee that it had no prior knowledge about flow of gas between the fields, but there was no mention of its submission in the panel’s report.
The panel said, citing a report by DeGolyer & MacNaughton, a US-based consultancy that was hired earlier by the firms, 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.
In a stock exchange filing on 5 November, Reliance contested the $1.5 billion claim the government made on the same day relating to the gas that seeped into its field, saying the company had worked within the boundaries of the block awarded to it and has complied with all applicable regulations and provisions of its lease.
“Disputes relating to natural resources do not augur well for the development of the sector. There can only be losers, not winners, if disputes are allowed to linger on in a high-risk, capital-intensive industry,” said Kalpana Jain, Senior Director, Deloitte in India.