RIL, ONGC gas dispute: Shah panel tenure extended to July end

RIL, ONGC gas dispute: Shah panel tenure extended to July end

Government has extended by three months the tenure of A P Shah Committee looking into the dispute

over natural gas migrating from state-owned ONGC’s idle blocks in KG basin to neighbouring fields of

Reliance Industries.

The committee has been asked to submit by July 31 its report on “acts of omission and commission” as

well as compensation to ONGC, an oil ministry official said.

The extension was necessary as RIL and its partner Niko Resources of Canada joined the inquiry

committee only on February 19 and have submitted voluminous data which needs to be studied, he


“They (the committee) sought an extension,” he said.

The ministry had constituted the one-man panel under Justice (Retd) A P Shah after US-based consultant

D&M, in its final report, stated that as much as 11.122 billion cubic meters of natural gas, worth over Rs

11,000 crore, had migrated from idling Krishna Godavari fields of Oil and Natural Gas Corporation

(ONGC) to adjoining KG-D6 block of RIL.

The panel initially sought written comments on the D&M report and the issue of connectivity of

reservoir from all parties to the case.

While ONGC and upstream regulator DGH responded, RIL and its partner Niko questioned the very

constitution of the panel and decided not to participate in its proceedings.

However, their 30% partner BP plc of UK agreed to participate in the proceedings. RIL and Niko later had

a change of heart and agreed to participate in the inquiry.

The official said since RIL and Niko submitted their response together with voluminous data late, the

Shah Committee wanted more time to study it.

The panel has been asked to look into legal, financial and contractual provisions and submit a report.

It has also been asked to report any “acts of omission and commission” on part of all the stakeholders

including RIL, ONGC, the Directorate General of Hydrocarbons and the government, according to the

terms and reference of the panel.

It has been asked to “quantify the unfair enrichment, if any, to the contractors of the adjacent block KG-

DWN-98/3 (KG-D6) and measures to prevent future unfair enrichment to these contractors on account

of gas migration.”

It has also been asked to “recommend action to be taken to make good the loss to ONGC/government

on account of such unfair enrichment to the contractors.”

The official said the government will decide on future course of action based on the recommendations

of the Committee.

RIL has 60 per cent interest in KG-D6 block, while Niko holds 10% stake. BP holds the remaining 30%.

DeGolyer and MacNaughton (D&M), had in its November 30 report, established that reservoirs in

ONGC’s Krishna Godavari basin KG-DWN-98/2 (KG-D5) and the Godavari-PML are connected with

Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) Block of RIL.

It states that as much as 11.122 billion cubic meters of ONGC gas has migrated from Godavari-PML and

KG-DWN-98/2 to KG-D6.

Of the 58.68 bcm of gas produced from KG-D6 block since April 1, 2009, 49.69 bcm belongs to RIL and

8.981 bcm could have come from ONGC’s side, D&M said.

At gas price of USD 4.2 per million British thermal unit, the volume of gas belonging to ONGC which RIL

has produced comes to USD 1.7 billion (Rs 11,055 crore).

ONGC had in 2013 claimed that RIL had deliberately drilled wells close to the common boundary of the

blocks and that some gas it pumped out was from its adjoining block.

RIL, on the other hand, has maintained that it has “scrupulously followed every aspect of the production

sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 block”

in Krishna Godavari basin.

D&M estimated that ONGC’s Godavari-PML had 14.209 bcm of gross in-place reserves and KG-D5

another 11.856 bcm. RIL’s D&D3 fields held 80.697 bcm gross in-place reserves.

Of these, 12.80 bcm of Godavari-PML, 8.01 bcm of KG-D5 and 75.33 bcm of KG-D6 are connected, it


It estimated that 11.89 bcm of gas from ONGC blocks would have migrated to KG-D6 by January 1, 2017.

This volume would rise to 12.713 bcm by May 1, 2019.

The volume of gas remaining after this would not be economically viable for ONGC to develop.

D&M was jointly appointed by ONGC and RIL to find if the neighbouring fields are connected.


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