KG Basin gas theft row: Reliance Industries blames ONGC for crucial omission

Reliance Industries (RIL) has blamed government-owned ONGC for ‘not pointing out’ more than a decade back the underground contiguity of their adjacent deepwater blocks in the Krishna Godavari (KG) basin. RIL has argued that the 2003 report, cited by ONGC before the AP Shah panel, was preliminary in nature and carried out just to meet regulatory norms and that it did not offer any scope for joint development of the blocks at that time.

The dispute, which is currently being reviewed by former chief justice of Delhi High Court A P Shah, took a sharp turn after ONGC cited a decade-old DeGolyer and MacNaughton (D&M) document titled ‘Appraisal report as of March 31, 2003 on KG-DWN-98/3 (Canadian policy no 2-B Case)’ to contend that RIL and its foreign partner Niko Resources were aware of the possible migration of gas.

Sources told FE that RIL has made a counter-argument before Shah that the impacted party was ONGC, who had accessed the D&M report in 2003, and so it “could have raised with RIL or DGH any issues that it felt required attention or discussion”, then and not now.

Shah had been given the task on December 16, 2015, to look into the migration of natural gas from ONGC’s idling Krishna Godavari fields to the RIL’s adjoining KG-D6 block. A report by US-based consultant D&M stated that as much as 11.122 billion cubic metres of natural gas had migrated from ONGC’s 98/2 area to adjoining KG-D6 block of RIL.

According to RIL, D&M was providing the appraisal report to its partner Niko for the purpose of ‘public filing’ that required a range of reserve estimates to meet the disclosure norms. “This, however, would not be appropriate for the far more complex and in-depth question of whether reservoir connectivity existed across the contract areas, to what extent and whether joint development was viable,” the Ambani firm told Shah.

Now, RIL’s argument is that the comments made in the 2003 appraisal report suggest that there was a possibility of connectivity, but only that is not firm evidence of it. It was not until D&M undertook its detailed 14-month study and analysis and furnished the 2015 report that reservoir connectivity was indicated. RIL maintains that at all times it has confined its petroleum operations to its contract area and its exploration and development activities were approved by the management committee, where officials from DGH and petroleum ministry are also party.

ONGC had moved the Delhi HC alleging theft of its gas by RIL by way of drilling wells close to its block. The KG-D6 block started producing hydrocarbon in 2009. ONGC has not produced any oil or gas from its block. On September 10, the Delhi HC disposed of ONGC’s petition and directed the government to take a decision within six months after it receives a report from an independent panel.