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KG basin gas row: Govt slaps $1.55 bn penalty on Reliance Industries
Private explorer Reliance Industries Ltd (RIL) has been slapped with a notice of around $1.55 billion for commercially taking out natural gas that belonged to state-run firm ONGC. The petroleum ministry has issued a notice to the Ambani firm on Friday morning, sources indicated to FE.
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A November 2015 study done by US-based consultant DeGolyer and MacNaughton (D&M) highlighting that as much as 11.122 billion cubic metres of natural gas had migrated from ONGC’s 98/2 area to adjoining KG-D6 block of RIL in the Bay of Bengal between April 1, 2009 and March 31, 2015, which the Ambani firm commercially exploited.
Last month, the petroleum ministry’s technical arm Directorate General of Hydrocarbons (DGH) had submitted its recommendations on the penalty. The technical arm of the petroleum ministry is believed to have taken into consideration capital, operational expenditure incurred by RIL while computing the penalty. But, it has also levied an interest, sources indicated to FE.
Comments from RIL are not immediately known.
A P Shah, a former chief justice of Delhi High court, agreed with the findings of D&M and said in his report that the quantification of unjust enrichment can either be based on the monetary value of the migrated gas produced, and to be produced, by RIL or it can be the profits earned by RIL, after taking into account its costs and sales figures.
The Shah panel said that the question of quantification of unfair enrichment is to be decided by the government, with the principle that whatever benefit RIL received in terms of the migrated gas is liable to be returned to the centre.
ONGC had argued that the quantification of unfair enrichment has to be based on the monetary value of the migrated gas produced by RIL. Conversely, RIL argued that it is entitled to recover the development, drilling and facilities costs (capital expenditure) and operating costs (Opex) for the migrated gas and to take into account its sales figures.
In July 2013, ONGC for the first time wrote to the DGH stating that there was evidence of lateral continuity of gas pools of the ONGC blocks with the KG-DWN-98/3 block, operated by RIL. The private explorer initially had denied ONGC’s claim of gas migration. Zach Britton Womens Jersey
