Oil and Natural Gas Corp (ONGC) will likely question the role the Directorate General of Hydrocarbons (DGH) played while Reliance was pumping out gas from the state firm’s fields and argue that its claim for compensation can’t be wished away just on the ground that the firm hadn’t developed the then commercially unviable fields, signaling the state firm’s resolve to challenge the government panel’s recommendations.
The board of the country’s largest oil and gas producer recently discussed the report of the government panel, headed by retired judge A P Shah, which found Reliance Industries had unjustly gained by producing gas from the fields operated by ONGC.
The board has decided to contest some of the key findings of the Shah panel report, which criticized the company for delayed field development and also recommended further scrutiny of “long periods of alleged inactivity on the part of ONGC in this case particularly.”
The company will shortly write to the oil ministry rebutting key charges that the company had prior information but did not act on it promptly, and that it can’t claim compensation as it had not developed the field yet, company executives said.
The company will also call into question the role of DGH in this matter, arguing that the government arm has access to all seismic data available with all operators and it should have acted in time, executives said.
“ONGC had data only about its own fields. But DGH had access to seismic data of our fields as well as that of Reliance’s. It knew exactly where the wells were being drilled by Reliance. It should have acted in time,” said an executive.
ONGC Chairman D K Sarraf said last week that the company had no information before 2013 that the reservoirs of Reliance and ONGC were linked and the panel ignored all the submissions the company made regarding this. He said the company’s technical and legal teams were studying the findings and it would be ‘very difficult’ to say whether ONGC will be compensated for gas loss.
ONGC executives said the company will stake its claim for compensation as it is the contractor and therefore must get the economic benefits flowing from the fields. “We have spent money on making the discovery and intended to develop this. At that time, it was not commercially viable to develop this. But the delay in developing the field can’t be used to hold back compensation,” an executive said.
The DGH had supported ONGC’s claim for compensation in a written submission to the panel but later its advocate took a different stand, arguing that the migrated gas produced by Reliance belonged to the government and ONGC had “no right whatsoever.”
The committee concluded that “till the time ONGC produces gas from its blocks, it has no legal or possessory rights in the gas under its surface and contract area” and cannot seek compensation from Reliance.
ONGC executives said the company was not delaying the project but it wasn’t commercially viable to produce then and this was borne out in a 2003 appraisal report of Reliance’s block, a copy of which the state firm had submitted to the Shah panel during the hearing.
ONGC had told the panel that the appraisal report concluded that “a standalone working of the ONGC block Godavari PML would be cost prohibitive and may not be commercially viable; the drawing of gas from the connected reservoir (RIL’s KG-DWN-98/3 block) would deplete the gas reserves of ONGC’s Godavari PML block; and finally that all these findings of the 2003 Appraisal Report were known to RIL and Niko.” Shaun Alexander Womens JerseyShare This