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Premature, says RIL about govt penalty on its Panna Mukta-Tapti oil field

RIL official says fine amount still to be decided; media reports put the figure at $3 bn

Amritha Pillay  |  Mumbai 

'Premature', says RIL on govt's levy of penalty for its PMT oil field

The government has ordered (RIL) to pay a penalty over an award on its Panna Mukta and Tapti (PMT) oil field, the company has informed BSE in a statement on Tuesday. The company, however, said the notice was premature.

"as part of the contractor for Panna Mukta and Tapti production sharing contracts, has been notified by [the] Government of India (GOI) of its computation of the purported share of GOI's Profit Petroleum and Royalty alleged to be payable by the contractor pursuant to the GOI's interpretation of Tribunal's final partial award dated 12 October 2016," said in its statement to BSE.

"Government's demand notice is premature. The quantification of liabilities (if any) of the parties arising out of the partial award have to be determined by the Tribunal after the Parties have made their respective submissions on quantification," it adds further.

The company said the tribunal is yet to schedule the timeline for the quantification phase. has already responded to the government's demand notice appropriately, it said. Further, has already challenged the partial award before the English courts and the matters are, as such, sub-judice.

An executive said the amount was still to be decided by the court though media reports quoted a figure of $3 billion as penalties. and Shell hold 30 per cent stake each in fields while the remaining is with state-owned Oil and Natural Gas Corp (ONGC).

In October 2016, a London-Based plan ruled in favour of the Centre on recovery cost from and BG Group (now part of Shell) for the oilfields. This was an interim award and final award was to follow procedural hearings. had appealed against the partial award in the British courts.

The legal tussle started in 2010 with and BG Exploration and Production India referred a number of disputes, differences and claims arising under two Production Sharing Contracts entered into in 1994 to against the government. In 2012, the tribunal passed a number of final partial awards, largely in RIL's favour. This was followed by the Centre challenging the Tribunal's awards before the Delhi High Court. The Supreme Court, however, allowed for to be carried out in the British courts.

The disputes over the block relate to, among other things, the limits of cost recovery, profit sharing and audit and accounting provisions of the PSCs. The value of the claim made by and others exceeded $500 million, according to RIL's 2016 annual report.

Even as fights over claims in this oil field, the regulatory issues have not stopped the company from making future investments in upstream facilities in India. In June, the company in partnership with BP Plc announced it will invest Rs 40,000 crore in the Krishna-Godavari block in the next three to five years.

First Published: Wed, July 19 2017. 02:08 IST