Tenure of Shah panel on RIL, ONGC gas dispute extended

The government has extended, by three months, the tenure of the A. P.Shah Committee examining the dispute over natural gas migrating from blocks of the state-run explorer ONGC in KG basin to neighbouring fields of Reliance Industries Ltd.(RIL), an official source said on Tuesday.

The source said the committee has been asked to submit by its report by July 31 on acts of "omission and commission" in the matter, and on compensation payable to the Oil and Natural Gas Corp.

The extension was necessary as RIL and its partner Niko have submitted voluminous data, said the source.

"They (the committee) sought an extension," he said, adding that since RIL and its consortium partner Niko Resources of Canada submitted their response together with voluminous data only on February 19, the committee required more time to study these.

The government, last December, constituted a committee under Law Commission chairman A.P.Shah to recommend compensation to ONGC to protect the government interest, following the American consultant DeGolyer and MacNaughton's (D&M) report on natural gas from ONGC's Bay of Bengal block migrating to adjoining fields of Reliance Industries (RIL).

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.

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.