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RIL benefitted from gas flow from ONGC fields, should pay damages: Shah panel

business Updated: Sep 01, 2016 01:39 IST
Suchetana Ray
Krihsna-Godavari basin

Reliance Industries KG-D6's control and raiser platform is seen off the Bay of Bengal in this undated handout photo.(Reuters File Photo )

The Justice AP Shah Committee looking into the dispute between state-owned Oil and Natural Gas Corporation (ONGC) and Reliance Industries Ltd (RIL) has blamed Mukesh Ambani’s company for taking advantage of the flow of gas between their adjacent fields in the Krishna-Godavari basin. The report was submitted to oil minister Dharmendra Pradhan on Wednesday.

The report says RIL benefited from gas flow from ONGC’s gas fields and should be made to cough up compensation. However, the compensation should be paid to the government and not the state-run oil major, says the Shah committee report, as the gas fields are sovereign property.

While blaming RIL for ‘unfair enrichment’, the report also calls for scrutiny of ONGC’s prolonged period of inactivity despite knowledge of the gas migration between the two fields.

The report also raises questions about both ONGC and RIL’s failure to report their knowledge of gas field connectivity to the authorities.

“Justice Shah submitted a comprehensive report on the gas dispute. It has some observations on the technical report of DeGolyer & MacNaughton (a US-based consulting firm). The government has one month to decide. We have to report by September 30. We will take appropriate action,” said the oil minister, earlier in the day, after receiving the report.

The one-man Shah committee has left the decision of the compensation amount to the government.

The committee was set up on 15 December 2015, as ordered by the Delhi high court after hearing ONGC’s petition alleging that the RIL consortium was benefitting from the gas flow.

The committee was mandated to “quantify unfair enrichment if any” by RIL and to recommend ways to compensate ONGC and the government after DeGoyler and MacNaughton reported that the fields managed by the two companies shared the same reservoir, leading to migration of gas from ONGC’s field to RIL’s.

RIL has been maintaining that it has drilled wells only within its block, as approved by the regulatory authority, and was not guilty of any wrongdoing.

The company will hold its 42nd Annual General Meeting on Thursday in Mumbai.

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