Amid legal battle, ONGC takes over physical control of PMT from RIL & Shell
The government had approached the Delhi High Court seeking to block RIL’s stake sale plans
With cloud over the $4.5-billion claim by the government towards profit and royalty from the Panna, Mukta and Tapti (PMT) fields, state-run Oil and Natural Gas Corporation (ONGC) has physically taken over the PMT fields from Reliance Industries (RIL) and Shell.
The government had approached the Delhi High Court seeking to block RIL’s stake sale plans.
This includes the $15-billion deal with Saudi Aramco, citing non-payment of an international arbitral award to the tune of $4.5 billion on PMT.
The Mukesh Ambani-led company had refuted the claims. According to sources, the final phase of arbitration is scheduled in mid 2020 and the government of India “has unilaterally made a calculation of an amount it claims to be payable, which is in dispute.”
The Delhi High Court had asked RIL to disclose its assets on Friday, which meant the company may have to list all its assets before sealing the 20 per cent stake sale to Saudi Aramco.
The government’s claim was based on a 2016 award by the English court, which did not mention any monetary sums.
The companies are of the opinion that except when quantified by the tribunal, no amount can be payable at this stage.
Despite the legal battle, operations of the controversial field were physically handed over to ONGC on Saturday night. “The legal battle was not going to affect PMT transfer as both RIL and Shell were surrendering the blocks and not selling them. Moreover, it was the government nominee who was taking over the asset,” said a source close to the development. The court direction came after signing the transfer agreement last week.
A source said the arbitration tribunal is likely to hear the application by RIL and Shell regarding an increase in cost recovery limit under the production sharing contract (PSC). The government had raised concerns in court about the company’s ability to recover under the awards, as the PSC for the fields was getting over on December 21.
In its response, RIL said its financials were robust. ONGC was directed by the Centre in 2011 not to participate in the arbitration initiated by its partners.
However, it may be bound to the PMT arbitration award being a majority partner in the JV.
The state-run major had written to the stock exchanges in May 2018 that the government’s demand was premature.
RIL and Shell held 30 per cent each in the Panna, Mukta, and Tapti joint venture (JV), while the remaining 40 per cent was owned by ONGC.
This was the first field in India to have operated under the joint operatorship model. From December 1994, the companies produced 211 million barrels of oil and 1.25 trillion cubic feet of natural gas from these fields.