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Shah panel set up to probe ONGC-RIL gas ‘pilferage’

business Updated: Dec 17, 2015 00:17 IST
Aman Malik
Aman Malik
Hindustan Times

Reliance Industries Ltd’s rig in KG-D6 block in the Krishna Godavari basin. (Reuters Photo)

The government has set up a judicial commission headed by AP Shah, a former chief justice of the Delhi High Court, to consider the findings of the report by a US-based consultant in the gas row between state-owned ONGC and Mukesh Ambani-promoted Reliance Industries Ltd (RIL).

The Shah committee, which will have three months to submit its report, will “quantify the unfair enrichment, if any, to the contractors of the adjacent block KG-DWN 98/3 and measures to prevent further unfair enrichment to these contractors on account of gas migration,” according to a December 15 office memorandum of the petroleum ministry. Further, the committee will “recommend action to be taken to make good the loss to ONGC or the government on account of such unfair enrichment to the contractors.”

On November 30, the consultant, DeGolyer & MacNaughton (D&M) had submitted a report in which it established that gas would have migrated from ONGC’s side to RIL’s side in the Krishna Godavari (KG) basin. The report had effectively established a continuity between the blocks operated by the two companies.

ONGC, which has operated the KG-DWN-98/2 block since 2005, also has another block Godavari PML adjacent to it, which, in turn has a common boundary with the KG-DWN-98/3 or KG-D6 block operated by RIL.

Of the 58.68 bcm (billion cubic metres) of gas produced from KG-D6 block since April 1, 2009, 49.69 bcm belonged to RIL and 8.98 bcm could have come from ONGC’s side, D&M had said.

At gas price of $4.2 per million British thermal unit, the volume of gas belonging to ONGC, which RIL has produced comes to $1.7 billion (Rs 11,055 crore).

In July 2013, ONGChad written to the Director General of Hydrocarbons saying that there is evidence of “lateral continuity” of its gas pools with those of KG-D6. Following this, ONGChad approached the Delhi High Court on the matter.