Govt to ask RIL to pay for migrated ONGC gas

DGH to calculate compensation amount in a month

The government will seek compensation from the Mukesh Ambani-promoted Reliance Industries (RIL) for producing natural gas that migrated from an adjoining block of Oil and Natural Gas Corporation.

Besides, the petroleum ministry will conduct an internal inquiry into any lapses by the state-owned company.

Petroleum Minister Dharmendra Pradhan said his ministry had accepted the proposal by a committee led by AP Shah that had recommended compensation be sought from RIL for the ‘unjust benefit’ it received through migration of gas from ONGC's block in the Krishna-Godavari basin to RIL fields.

“We have accepted the Shah commission's recommendations entirely. However, the compensation needs to be quantified. The Directorate General of Hydrocarbons (DGH) will be asked to calculate the amount. It will calculate the amount within one month and we will come out with a notice after that,” said Pradhan. DGH is the technical arm of the oil ministry.  

The one-man panel’s report had agreed to the findings of a report submitted by DeGolyer and MacNaughton in November 2015, which stated that out of the 58.68 bcm of gas produced from the KG-D6 block since April 1, 2009, 8.98 bcm could have migrated from ONGC’s fields. According to industry experts, this will work out to about Rs 11,000 crore in terms of value, based on a gas price of $4.2 per million metric British thermal unit.

The panel had also recommended further inquiry into whether ONGC and RIL had prior knowledge about the migration. “The inquiry will be conducted by the government,” Pradhan clarified.  “The fact has been established. There has been migration. There is some protocol on how to look into the issue,” he added.

The Shah panel, set up on December 15, 2015, had submitted its report on August 31. RIL’s D1 and D3 fields had estimated reserves of 80.70 bcm, while ONGC’s Godavari-PML had 14.21 bcm of reserves and KG-D5 another 11.86 bcm.

The panel had stated that long periods of alleged inactivity on the part of ONGC must be examined further. When asked about this, ONGC Chairman DK Sarraf refused to comment.

In 2013, ONGC alleged RIL intentionally drilled wells close to its blocks through which the gas had migrated.  Following this, D&M was appointed by both RIL and ONGC to study the issue.

According to D&M’s report, the reservoirs in ONGC’s KG-DWN-98/2 (KG-D5) and the Godavari-PML are connected with the Dhirubhai 1 and 3 (D1 & D3) fields located in the KG-DWN-98/3 (KG-D6) block of RIL.

Pradhan added the government would take steps to strengthen DGH, as recommended by the panel. Shah had asked the ministry and the  DGH to review and strengthen the disclosure system by imposing penalties for deliberate suppression of material information.

THE RIL-ONGC SAGA

• Jul 2013: ONGC alleges that Mukesh Ambani-led RIL intentionally extracted gas from its blocks in KG-D6
   
• May 2015: ONGC moves Delhi HC, stating its Godavari Block and discovery block KGDWN-98/2 are contiguous to RIL-owned KG-D6
   
• Nov 2015: Consultant DeGolyer & MacNaughton establishes natural gas worth over Rs 11,000 crore had migrated from ONGC’s idle KG fields
   
• Dec 2015: A P Shah panel set up to look into the legal and economic implications of the migration issue
   
• Feb 2016: RIL and Niko agree to participate in inquiry
   
• Aug 2016: Shah panel’s report confirms migration of gas from ONGC’s fields to RIL
   
• Sep 30: Govt accepts Shah panel report, asks DGH to quantify the compensation amount by October 31