ONGC has no claims in KG gas row: RIL

According to a report, about 9 billion cubic meters of natural gas may have migrated from ONGC's idling Bay of Bengal fields

State-owned Oil and Natural Gas Corporation (ONGC) will have no claims to make for natural gas migrating from its block to neighbouring contiguous fields of Reliance Industries in Bay of Bengal after all expenses are accounted for, the private firm said on Friday.

In a communication to employees, 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.

All wells, it said, were drilled “strictly within the KG-D6 block boundaries, as per the development plan approved by the relevant authorities under the PSC”.

The assertion comes after US-based consultant D&M in a draft report stated that about nine billion cubic metres of natural gas worth Rs 9,000 crore may have migrated from ONGC’s idling Bay of Bengal fields to adjoining KG-D6 fields.

“Migration of oil and gas beyond block boundaries is a natural phenomenon which the contractor has no means to control. Therefore, any suggestion that RIL has breached any obligations or violated any provisions of law or of the PSC is incorrect,” RIL said. It added that the hydrocarbon resources belong to the nation and the main objective of the PSC is for the contractor to expeditiously develop and produce such resources for the benefit of the nation.

“The PSC thus provides for the contractor who has incurred capital and operating costs to develop this resource, to get compensated for the same from the revenues generated.

Given the circumstances, RIL does not believe that there is a claim of any nature against RIL,” the communication said.

RIL believes if all the expenses it had incurred in puting up infrastructure as well as royalties and profit petroleum paid to the government on the share of gas produced is accounted for, ONGC will get nothing.

“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,” RIL said.

DeGolyer and MacNaughton (D&M) last week submitted to the two firms as well as the Directorate General of Hydrocarbons (DGH) a draft report stating that ONGC’s Godavari Block (known as G-4) as well as KG-DWN-98/2 blocks are contiguous to RIL-operated Block KG-DWN-98/3 (KG-D6).

According to D&M, RIL had drawn 58.67 bcm of gas from four wells near the boundary wall with ONGC block up to March 31, 2015, out of which at least 9 bcm may belong to ONGC.