RIL, ONGC gas dispute: Shah panel tenure extended to July end

Government has extended by four (rpt) four months the tenure of A P Shah Committee looking into the dispute over natural gas migrating from state-owned ONGC's idle blocks in KG basin to neighbouring fields of Reliance Industries.
The committee has been asked to submit by July 31 its report on "acts of omission and commission" as well as compensation to ONGC, an oil ministry official said.
The extension was necessary as RIL and its partner Niko Resources of Canada joined the inquiry committee only on February 19 and have submitted voluminous data which needs to be studied, he said.
"They (the committee) sought an extension," he said.

The ministry had constituted the one-man panel under Justice (Retd) A P Shah after US-based consultant D&M, in its final report, stated that as much as 11.122 billion cubic meters of natural gas, worth over Rs 11,000 crore, had migrated from idling Krishna Godavari fields of Oil and Natural Gas Corp (ONGC) to adjoining KG-D6 block of RIL.
The panel initially sought written comments on the D&M report and the issue of connectivity of reservoir from all parties to the case.

While ONGC and upstream regulator DGH responded, RIL and its partner Niko questioned the very constitution of the panel and decided not to participate in its proceedings.

However, their 30 per cent partner BP plc of UK agreed to participate in the proceedings. RIL and Niko later had a change of heart and agreed to participate in the inquiry.
The official said since RIL and Niko submitted their response together with voluminous data late, the Shah Committee wanted more time to study it.
The panel has been asked to look into legal, financial and contractual provisions and submit a report.
It has also been asked to report any "acts of omission and commission" on part of all the stakeholders including RIL, ONGC, the Directorate General of Hydrocarbons and the government, according to the terms and reference of the panel.

It has been asked 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."
It has also been asked to "recommend action to be taken to make good the loss to ONGC/government on account of such unfair enrichment to the contractors."
The share of gas-based power in total generation plunged
to 4 per cent in fiscal 2016 compared with 12 per cent in 2011, because of inadequate domestic supply and unviable LNG prices, it said.
Prasad Koparkar, Senior Director, Crisil Research said: "Despite a subsidy-based revival scheme, plant load factors (PLFs) at gas-based power generation facilities are languishing at 20-25 per cent. Even those that received subsidy could operate at only at half their target PLFs (50 per cent in the first half of current fiscal)."

This was because spot prices of electricity have fallen below Rs 3 per unit, while gas-based power costs Rs 4.7 per unit after subsidy.
"Therefore, further policy support, in line with the tax and duty exemptions provided to renewables, and mandatory scheduling of gas-based power, would be critical to boost gas usage in the power sector," he said.
Another key sector with significant potential is city gas distribution (CGD). Allocation of domestic gas leads to cost savings up to 30 per cent, boosting its use in the transport sector.
However, lack of curbs on furnace oil -- a cheaper but more polluting fuel -- have resulted in industries continuing to use it.