RIL-ONGC gas row: Govt sets up A P Shah Judicial commission to probe dispute

The government has set up a judicial commission headed by former Chief Justice of Delhi High Court Ajit Prakash Shah to look into the findings of the international consultant DeGolyer & MacNaughton in the gas dispute between Reliance Industries (RIL) and state-owned Oil and Natural Gas Corporation (ONGC).

The consultant had said 11 billion cubic meter (bcm) of gas may have flown from ONGC’s Godavari PML and KG-D5 blocks to RIL’s KG-D6 block in the Krishna Godavari basin off the Andhra coast. While D&M did not delve into the aspect of financial value of the gas migration, the volume of gas belonging to ONGC works out to around $1.7 billion (Rs 11,300 crore at current exchange rate) at a gas price of $4.2 per million british thermal units (mmbtu).

“The judicial commission will look at the acts of omission and commission of all the parties involved including RIL, ONGC, DGH and the government,” a top-level oil ministry official told Business Standard. “If gas has migrated from ONGC’s blocks to RIL’s block, it is important to understand the role of all the other parties,” he added.

The single-member Shah commission has been asked to consider the report of the international consultant and recommend the action to be taken by the government considering the legal, financial and contractual provisions including those contained in the Oilfield Regulations and Development Act, the Petroleum and Natural Gas Rules and the relevant Production Sharing Contracts (PSCs).

The official said the commission will also quantify any “unfair enrichment” that may have happened to the contractors of the KG-D6 block – RIL, BP and NECO – and measures to prevent further unfair enrichment on account of gas migration. The Shah commission will also recommend action to be taken to make good the loss to ONGC or government on account of such unfair enrichment.

The block KG-DWN 98/2 (or KG-D5) has been operated by ONGC since 2005. While KG-D6 is under production since 2009, the Field Development Plan (FDP) for the block KG-DWN-98/2 is yet to be approved. The judicial commission headed by Justice A P Shah, who was also the Chairman of the 20th Law Commission, has been asked to submit its report in three months to the government.

The official said the committee will have the freedom to formulate its own procedure and call for any records or examine any witness while the petroleum ministry will provide the necessary administrative support. Shah had also chaired a high level to look into the issue of applicability of Minimum Alternate Tax (MAT) on capital gains made by Foreign Institutional Investors. That panel’s recommendation was accepted by the government in September.

Texas-based D&M had earlier this month submitted its final report on the natural gas row between the two oil companies to the government establishing gas reservoirs belonging to the two firms in the KG basin are continuous. It said RIL has already produced 317 billion cubic feet (bcf) of the 393 bcf of gas migrated from ONGC’s blocks.

Texas-based D&M had earlier this month submitted its final report on the natural gas row between the two oil companies to the government establishing gas reservoirs belonging to the two firms in the KG basin are continuous. It said RIL has already produced 317 billion cubic feet (bcf) of the 393 bcf of gas migrated from ONGC’s blocks.