Coal News We love to talk!

NOV 16 2016

Gas migration case: RIL initiates arbitration against govt

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 16th NOV 2016

Mukesh Ambani’s Reliance Industries (RIL) and its partners, BP and Niko Resources, have initiated an arbitration process against the Centre’s notice imposing a penalty of $1.55 billion on them for allegedly using migrated gas from state-run Oil and Natural Gas Corporation’s asset in the KG-D6 block.

The penalty was announced on November 3. RIL had said the contractor’s liability had not been established by any process known to law and quantification of the purported claim was arbitrary.

“RIL remains convinced of being able to fully justify and vindicate this position,” it said. The company is already locked in arbitration with the government on various other issues related to KG-D6. The petroleum ministry came out with a penalty notice after a report by a one-man panel of ex-judge A P Shah suggested this be done, for ‘unjust’ benefit from the migration of gas.

The Shah panel agreed with US-based consultant DeGolyer and MacNaughton (report in November last year) that 11.122 billion cubic metres of natural gas had migrated from ONGC’s 98/2 area to RIL’s adjoining KG-D6 block from April 2009 to March 2015. The penalty was based on a gas price of $4.2 per million British thermal units.

Gas migration case, ONGC, RIL, BP. Niko ResourcesRIL had made its discoveries in 2002; BP and Niko have 30 per cent and 10 per cent stake in the assets, respectively. RIL started commercial production from the block on April 1, 2009. In July 2013, ONGC wrote to the Directorate General of Hydrocarbons (DGH), stating there was evidence of lateral continuity of gas pools of the ONGC blocks with that of RIL. Consequently, ONGC sought data on RIL’s block.

RIL and ONGC held a series of discussions and it was agreed that an independent consultant would be jointly appointed to carry out a study. However, before one was identified, ONGC petitioned in the Delhi High Court, in May 2014, against the Government of India, DGH and RIL. It was following the court decision that the government had set up the Shah panel.



Delhi Gas Natural Gas Oil ONGC Reliance Industries limited Directorate General of Hydrocarbons United States Petroleum Hydrocarbons India ongc RIL MAN

Related News

  • ONGC eyes doubling natural gas production to 100 mmscmd in 5-6 years  Read more
  • If crude oil falls, govt might cut excise duty on fuel  Read more
  • Solar, wind parks going to be flavour of coming years: Vivek Sharma, Director-Energy & Natural Resources, Crisil  Read more
  • Cairn faces Rs 10,247-cr fine on top of Rs 29,000 cr tax demand  Read more
  • CIL unions mull strike over stake sale on August 31  Read more
  • Under attack DERC withdraws power tariff hike within 24 hours  Read more
  • Fuel retailers invite tenders for 20 million litres of biodiesel  Read more
  • Power, water availability to determine TN’s growth: Rangarajan  Read more
  • Oil from Bombay High cause for tar balls on Gujarat coast: NIO  Read more
  • After tepid response, SECI relaxes norms to lure bidders for 10 GW solar auctions  Read more