Gas theft case: HC seeks response from Reliance, others

The Delhi High Court on Friday sought response from Mukesh Ambani-led Reliance Industries (RIL) and its partners on the government’s petition accusing it of “unjust enrichment of over $1.729 billion” by siphoning gas from deposits they had no right to exploit.

Justice Rajiv Shakdhar while seeking response from the RIL, its partners – UK-based BP Plc and Niko Resources of Canada – posted the matter for directions on December 15.

Seeking setting aside of the international arbitration award that ruled in favour of the RIL-led consortium, Attorney General KK Venugopal said that “the award strikes at the heart of the public policy and has given a premium to a contractor (RIL) that has amassed vast wealth by committing an insidious fraud as well as criminal offence …”

“The unjust enrichment amassed by the contractor had already reached more than $1.729 billion today, and is since increasing as the production of migrated gas is still continuing,” it stated in its petition before the HC.

RIL was represented by senior counsel Harish Salve and counsel Sameer Parekh. The government has raised the demand upon RIL, the contractor of KG-DWN-98/3 block in the KG basin in the Bay of Bengal, for disgorgement of unjust enrichment made by draining and selling the gas that migrated from adjacent ONGC blocks – Godavari PML and KG-DWN-98/2, which share borders with the RIL’s block. It said that RIL was neither entitled to produce as per the PSC nor had any express permission from the government.

Favouring RIL-led consortium in the so-called gas migration dispute case, an arbitration panel in July had rejected the government’s contention that RIL and its partners unjustly gained by producing gas from ONGC’s fields in the KG basin and must return the gains by paying $1.55 billion to the government.

The three-member tribunal headed by Singapore-based arbitrator Lawrence Boo in its 2:1 award agreed with RIL’s view that the production sharing contract (PSC) doesn’t prohibit the contractor from producing gas—irrespective of its source—as long as the producing wells were located inside the contract area. It also had held that the consortium was not liable to pay any amount to the GoI and had also directed the latter to pay $8.3 million as the cost of arbitration to the consortium.

Reliance Industries Limited (RIL)