Committee set up to protect ONGC interest in RIL gas dispute: Pradhan

Petroleum Minister Dharmendra Pradhan on Thursday said a committee under Law Commission chairman A.P.Shah, has been set up to recommend compensation to ONGC to protect the government interest following American consultant's report on its natural gas from its Bay of Bengal block migrating to adjoining fields of Reliance Industries (RIL).

"We received the report of D&M (DeGolyer and MacNaughton) on November 30 and we saw it on December 1. D&M report has talked about some technical things like flowing of gas from ONGC's blocks to adjacent Reliance block," Pradhan told reporters here.

He said the Shah panel has been constituted "to understand the financial implications and to protect the interest of the government and government companies".

"We will protect government and PSU interest," he added.

The committee's terms of reference include, to "quantify the unfair enrichment, if any, to the contractors of the adjacent block KG-DWN-98/3 (KG-D6) and measures to prevent future unfair enrichment to these contractors on account of gas migration".

The D&M report says 11.122 billion cubic meters (bcm) of ONGC gas has migrated from Godavari Producing Mining Lease PML and KG-DWN-98/2 (KG-D5) in Krishna Godavari basin to Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) block of RIL, as the reservoirs in question are connected.

The one-man committee will submit its report in three months on "how to compensate the losses keeping in mind the legal and business aspects".

Pradhan said the panel has been asked to report any "acts of omission and commission" on the part of all stakeholders including RIL, ONGC, the Directorate General of Hydrocarbons and the government.

"This will also give us a chance to analyse all those who are responsible for this kind of disorder. The government will act after the commission submits the report in three months," he said.

It says that of the 58.68 bcm of gas produced from KG-D6 block since April 1, 2009, 49.69 bcm belongs to RIL and 8.981 bcm could have come from the ONGC's side

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

ONGC had moved the high court here alleging that RIL extracted gas upto 18 billion cubic meters (bcm) from ONGC blocks, resulting in loss of several thousand crores of rupees.

In October, RIL had said it has "scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the KG-D6 Block".

It said all its wells were drilled "strictly within the KG-D6 block boundaries, as per the Development Plan approved by the relevant authorities under the PSC (production sharing contract)".

D&M was jointly appointed by ONGC and RIL to investigate and submit a report on the matter.