RIL-ONGC gas dispute: Shah committee gets another extension
The oil ministry is likely to extend the tenure of the Justice A.P. Shah Committee looking into the dispute between state-owned Oil and Natural Gas Corporation (ONGC) and Reliance Industries Ltd. regarding the flow of gas between their fields in the Krishna-Godavari basin. The committee was supposed to submit its report by July 31, but now has got an extension till August 31.
A person familiar with the discussions between the ministry and the committee said the panel has sought more time to give its recommendations. “Informally the extension has been given, a formal notification will be done soon,” said a source familiar with the development, who did not wish to be named. He added that the extension has been given as the one-man committee requires more details from the stakeholders especially the government and the regulator, Directorate General of Hydrocarbons. The committee will give its report on the legal, financial and contractual impact of the dispute.
ONGC claims that Reliance has benefited from gas flow between their adjacent fields during the 2009-2013 period and took the Mukesh Ambani owned company to court over the matter. The committee set up on 15 December 2015, as ordered by the Delhi High Court after hearing ONGC’s petition alleging the RIL consortium benefitting from the gas flow.
RIL has maintained that it drilled wells only within its block, as approved by the regulator, and was not guilty of any wrongdoing. The committee is mandated to “quantify unfair enrichment if any” by RIL and to recommend ways to compensate ONGC and the government after independent American consultant DeGoyler and MacNaughton (D&M) confirmed that the fields managed by the two companies shared the same reservoir leading to migration of gas from ONGC’s field to RIL’s. The report stated that as much as 11.12 billion cubic meters of natural gas, worth over Rs 11,000 crore, had migrated from idling Krishna Godavari fields of ONGC to adjoining the block of RIL. D&M was jointly appointed by ONGC and RIL to ascertain if the neighbouring fields are connected.
Both the companies are now getting ready for pumping more investments into their respective fields to take advantage of the new pricing policy. The new pricing formula announced by the government on March 10 allows producers to sell gas from difficult to drill terrains at a higher price.