Fresh twist to RIL-ONGC KG gas face-off

Government appoints committee under former Delhi high court chief justice A.P. Shah to probe dispute

New Delhi: The government appointed a committee under former Delhi high court chief justice A.P. Shah to probe the dispute between state-run Oil and Natural Gas Corp. Ltd (ONGC) and Reliance Industries Ltd (RIL) over gas in the Krishna-Godavari (KG) basin.

The panel has been given a wide berth, with its terms of reference including probe of “acts of omission and commission" of all stakeholders including the government—which at the time of the dispute was the Congress-led United Progressive Alliance (UPA).

The committee has been asked to submit its report in three months.

The dispute pertains to ONGC’s allegation that RIL exploited gas reserves owned by the state-run oil explorer in the course of its own drilling in the KG gas basin.

The adjacent deep water fields in question are RIL’s D6 field (KG-DWN-98/3) off the east coast and ONGC’s KG-DWN-98/2 block.

Petroleum minister Dharmendra Pradhan said that the one-man Shah committee will recommend action to be taken by the government after studying the report submitted by DeGolyer and MacNaughton, a US-based global petroleum consulting firm, which was appointed jointly by RIL and ONGC to carry out a third-party study.

The firm had submitted its report last month where it had stated that around 11.122 billion cubic meters of natural gas, roughly estimated to be worth 11,000 crore based on market prices, had migrated from idling KG fields of ONGC to adjoining KG-D6 block of RIL, according to the Press Trust of India.

The terms of reference of the Shah committee include studying the report submitted by DeGolyer and MacNaughton and recommending steps that the government can take considering the legal, contractual and financial provisions that are there in the production-sharing contracts, the Oilfields Regulations and Development Act and the petroleum and natural gas rules.

Further, the committee has been asked “to quantify the unfair enrichment, if any, to the contractors of the adjacent block KG-DWN-98/3 and measures to prevent future unfair enrichment to these contractors on account of gas migration and to recommend action to be taken to make good the loss to ONGC/Government on account of such unfair enrichment of contractors".

Pradhan said the government will decide on future course of action based on the recommendations of the committee. Emails sent to an RIL spokesperson and ONGC had not been answered till the time of going to press.

The KG Basin is an established hydrocarbon province with a resource base of 1,130 million metric tonnes (mmt), of which 555 mmt are assessed for the offshore region, according to data compiled by the Directorate General of Hydrocarbons.

The report by DeGolyer and MacNaughton had established that reservoirs in ONGC’s KG basin KG-DWN-98/2 (KG-D5) and the Godavari-PML (petroleum mining lease) are connected with RIL’s Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) Block, said PTI.

E.A.S Sarma, former power secretary, said: “I think it is a good move and would provide a lot of clarity on rules and regulations governing the oil sector. As an independent person, justice Shah will surely look into all aspects of oil field rules which guide the production-sharing contracts. If there was anything like RIL did not deliberately inform about gas from ONGC fields, justice Shah will surely look into it."

Mayank Aggarwal contributed to this story.

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