The value of Reliance Industries’ (RIL) alleged “undue enrichment”, owing to migration of gas from state-run ONGC block to its KG D-6 field off the Andhra coast, has doubled to $3 billion from $1.5 billion estimated in March 2015, according to government sources.
With much at stake, the government has asked attorney general K K Venugopal to personally monitor its challenge to an arbitration award in favour of RIL. India’s largest private sector oil company had initiated the arbitration proceedings after the government had slapped a recovery notice for $1.5 billion. The government is set to move the court, seeking refund of the undue benefit seen to have been derived by RIL.
RIL declined to comment on the issue.
“The order by the arbitration tribunal in favour of RIL has negated Indian laws, which will be the main focus of the A-G’s contention in the appeal,” a source said. The government is also relying on the fact that RIL-led consortium of RIL-Niko-BP was aware that extraction of gas from its KG D-6 will lead to migration of gas from ONGC’s block and that it failed to bring this to the notice of the authorities.
This was also highlighted by the Justice A P Shah Commission, which was set up by the government in December 2015 after ONGC moved the Delhi High Court in 2014 on the gas migration issue.
RIL’s partner in the venture Niko had obtained a report from the US-based oilfield consultancy firm DeGolyer MacNaughton (D&M) in 2003, where the latter had said that if they extract gas from KG-D6 field, gas from ONGC’s block will migrate as well, the source said.
ONGC had in 2014 dragged RIL and the government to the Delhi high court, seeking appointment of an independent agency to verify its claims as RIL wells were too close to ONGC’s block and that migration of its gas had taken place. D&M again gave its report in 2015, confirming what it had said earlier.Share This