September 9th, 2016
On the 31st of August, 2016, Mukesh Ambani-led Reliance Industries Limited was indicted in a dispute with the Oil and Natural Gas Corporation of India after the AP Shah Committee noted that it had made unfair gains from ONGCs oil fields in the Krishna-Godavari basin. According to the report made by the panel, RIL had received ‘unjust benefit’ from oil that had flown into its KG 6 field from ONGC’s adjacent one.
Just a day after this report came out, Mukesh Ambani unveiled the ambitious Reliance ‘Jio’, and the news of the committee’s report was lost in the din.
So, what did this committee find?
The report pertains to a dispute over-extraction of natural gas that made news in July 2013, when ONGC wrote to the director-general of hydrocarbons seeking data on an adjoining block that was under RIL Just before the April 2014 Lok Sabha elections, the three parties to the dispute – ONGC, RIL, and the director-general – agreed to hire an independent consultant to sort out claims and counter-claims regarding interconnectivity of the reservoirs from which they were extracting natural gas. But even as the results were about to be declared, ONGC filed a petition in the Delhi High Court. ONGC alleged that RIL’s wells were “so drilled and constructed that there is a pre-planned and calculated slant/angular incline towards the gas reserves of (the) petitioner with a clear idea to tap the same.”
Overall, ONGC accused RIL of drawing natural gas worth Rs 30,000 crore from the former’s wells.
The implications of the committee’s findings and report are not good news to RIL, and even though the company might try to hide it with Jio launch, it will affect the financials of RIL in a big way.