'Consultant's report will determine future course of action in ONGC-RIL gas case'

Q&A with D K Sarraf, ONGC Chairman

The The Delhi High Court last week disposed of a petition by Oil and Natural Gas Corporation (ONGC) in a case where the state-run explorer had alleged natural gas from two of its blocks in the KG Basin off the Andhra coast – KG-DWN-98/2 and Godavari PML -- may have been exploited by Reliance Industries (RIL).

The court has asked the parties to wait for the independent expert report to be submitted in October and allowed ONGC to approach the court again if the government does not act within six months of the submission of the report. During a media interaction following the 22nd AGM of the company, Business Standard queried ONGC Chairman and Managing Director (CMD) D K Sarraf on the case. Here is what he had to say: 

What is the strategy for the future course of action by ONGC in the case? What happens in case the expert report establishes reservoir continuity?

We had an apprehension in the month of March 2014 that some of the reservoir on our side might be extending to the block of Reliance side (G-DWN-98/3 or KG D6). And some of the gas on our side might have been produced by RIL. The rest of the case you already know. The court has now decided. A consultant was appointed by ONGC and RILtaken together under the guidance of the DGH. That consultant’s work is still on. That report is expected to come at some time in October 2015. When the report does come, we would know whether our apprehension is right or not. In case our apprehension is right, then the court has advised the government that they should take suitable decision within six months of the receipt of the report of the consultant. So, now based on the consultant report, the government would take a decision. 

Would you be willing to go for joint development in case the consultant report establishes continuity of reservoirs?

All of this would be putting the cart before the horse. We do not know what sort of report would come and what would be the government’s view on the report etc. So, all these things would need to be seen but whatever we decide would be in the interest of ONGC and the nation. 

You would not be able to develop cluster 1 unless this dispute is sorted out because G4 discovery is part of cluster 1. Is that correct?

There is no dispute. We had an apprehension that the two blocks have a reservoir with continuity. That matter is with the consultant which has been jointly appointed under the supervision of the regulator. Cluster 1 assessment of resources was done before this apprehension. And the results of the assessment came before the production from the other side started. Now we do not know and we would need to see how much reserves are there. All these facts would come from the consultant report. So, the report of the consultant is going to be a very important document to decide the course of action between us and Reliance as well as the future course of action on Cluster 1.

If the reservoirs are not found to be connected, your entire argument will fall apart... 

We would need to see whether the reservoirs are connected or not. Today, it is unfair to say anything on this matter as an expert is looking into it.