Tribunal Rejects Govt’s Claim Of Gas Migration Against Reliance, Orders Govt To Pay $8.3 Million
On July 31, the Reliance Industries (RIL) controlled by Mukesh Ambani and its partners BP Plc and Niko Resources Ltd won the 20-month long gas migration dispute against the government. An international arbitration tribunal, headed by Singapore-based arbitrator Lawrence Boo rejected the Indian government’s claim. The tribunal has also asked the government to pay the costs of $8.3 million to the consortium.
RIL said in a filing to the stock exchanges, “All the contentions of the consortium have been upheld by the majority with a finding that the consortium was entitled to produce all gas from its contract area and all claims made by the Government of India have been rejected. The consortium is not liable to pay any amount to the Government of India”, as reported by Livemint.
RIL also added in its statement, “An international arbitration panel has issued an award in favour of Reliance, BP & Niko (Consortium) rejecting completely the claims of the Government of India against the Consortium in respect of migrated gas, by a majority of 2 to 1.”
Govt had alleged RIL had received unjust benefit
On August 31, 2016, RIL 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 ONGC’s oil fields in the Krishna-Godavari (KG) basin. According to the report made by the panel, RIL had received ‘unjust benefit’ from oil that had flown into its KG D6 field from ONGC’s adjacent one.
On November 4, 2016, the petroleum ministry had asked RIL to pay a penalty of $1.55 billion and had given one month’s time to do so.
DeGolyer and MacNaughton, a US-based consultancy selected by both ONGC and RIL had then said in a report that about 11 billion cubic metres (bcm) of gas had migrated from adjacent fields to KG D6 between April 1, 2009, and March 31, 2015, 8.9 bcm of which was tapped by RIL. Shah panel relied on this report for confirmation of gas flow between blocks.
ONGC had also filed a petition in the Delhi High court alleging that the wells of RIL “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.”
Reportedly, the Indian government is going to challenge the decision of the tribunal.