No basis for latest RIL notice: Oil ministry

NEW DELHI: The oil ministry has found as legally and contractually untenable Reliance Industries' notice for arbitration - fifth in a series - against an October 2013 order taking away 81% area of the Andhra offshore KG-D6 block, including several discoveries estimated to hold a trillion cubic feet of gas.

According to government documents accessed by TOI, RIL is being asked to withdraw its January 14 notice which sought compensation from the government for breach of contract and withdrawal of the order of relinquishment.

In its order, the ministry had asked RIL and its partners, British major BP and Canadian explorer Niko Resources, to surrender 6,198.88 sq km of the 7,645-sq km block on the ground that the consortium had overshot the timeline allowed to start production from discoveries.

The order allowed the consortium to retain only the parts of the block where discoveries had been recognised by the ministry's technical arm, the Directorate General of Hydrocarbons.

RIL served the arbitration notice within a month after the ministry sent to the Prime Minister's Office a report on the status of various arbitrations cases filed by RIL against the government, including the case regarding Panna-Mukta and Tapti fields where the government has sought compensation of $4.6 billion on account of loss of production and alleged loss to the exchequer due to faulty income-tax calculation by the company.

The ministry's rejection is likely to spark another legal bout between RIL and the ministry as the company is expected to approach the courts for redressal. RIL did not respond to a questionnaire emailed by TOI.

Upholding the relinquishment order, issued under the watch of M Veerappa Moily during the last phase of the UPA-2 government, the ministry has taken the stand that the exploration period for the block had "expired on July 7, 2008, including all extensions granted by the government".

The ministry has also said RIL had also passed the timelines for submitting appraisal and field development plans and there was no provision in the production sharing contract to extend the appraisal period.

Similarly, timelines for satellite discoveries of D4, D7, D8, D16 and D23 also lapsed and no development plan was submitted. Besides, the consortium also did not "submit DoC (declaration of commerciality) for D-5 and D-18 discoveries and the period had also expired".

Claiming that 2013 order breached its right to retain the fields, RIL has argued that the time period for approving these discoveries "never expired" as the block oversight panel had agreed to a phased approach for their development.