'RIL is not liable for KG-D6 gas migrating to ONGC blocks'

The Mukesh Ambani-led Reliance Industries (RIL) said on Friday that it has no legal or contractual liabiities arising from natural gas migrating from the blocks of state-run explorer ONGC in the Bay of Bengal to neighbouring contiguous fields of RIL

"Migration of oil and gas beyond block boundaries is a natural phenomenon which the contractor has no means to control," RIL said in a communication to its employees.

"Therefore, any suggestion that RIL has breached any obligations or violated any provisions of law or of the PSC is incorrect," it said.

The RIL letter follows the international expert DeGolyer & MacNaughton's draft report submitted last week that about 9 billion cubic meters of natural gas worth Rs.9,000 crore may have migrated from ONGC's Bay of Bengal fields to RIL's adjoining KG-D6 fields.

RIL said it has "scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 Block" in the Krishna Godavari basin.

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)".

"After submission of the final report by D&M, RIL, while reserving its rights under the PSC and in law, will continue to fully cooperate with the Ministry of Petroleum and Natural Gas and any actions it takes to comply with the Delhi High Court's order," it added.

Last month, the Delhi High Court directed the government to take a decision within six months of receiving the report of the expert panel.

According to ONGC, gas discoveries in its G4 and KG-DWN-98/2 (KG-D5) blocks in the eastern offshore, extend into RIL's KG-DWN-98/3 or KG-D6 block. It had moved the high court alleging that RIL extracted gas upto 18 billion cubic meters (bcm) from ONGC blocks resulting in loss of several thousand crores of rupees.

According to the D&M report, RIL had drawn 58.67 bcm of gas from four wells near the boundary wall with ONGC block up to March 31, this year, out of which at least 9 bcm may belong to ONGC.

Meanwhile, RIL on Friday announced that the KG-D6 field produced 0.39 million barrels of crude oil and 37 billion cubic feet (BCF) of natural gas in the second quarter ended September, a reduction of 24 percent and 9 percent, respectively, on a year-on-year basis.

The drop in oil and gas production was mainly on account of a natural decline in the fields, the company said.