State-owned explorer ONGC’s latest tests at its 98/2KG Basin block, sources say, have confirmed its claim that gas from the PSU’s block has been drilled out by Reliance Industries (RIL), which operates the adjacent block 98/3 KG Basin.
In May 2014, ONGC had moved the Delhi High Court alleging that RIL had “cleverly and craftily exploited” gas from the PSU’s blocks in the Krishna-Godavari Basin totalling about 18 billion cubic metres (bcm) between 2009 and September 2013. At a price of $4.2 per million British thermal units, RIL’s revenue from alleged sales of ONGC’s 18 bcm of gas could be pegged at around $2.7 billion, although the PSU did not mention any specific figure in its petition. The court had issued the notice to all the parties concerned — RIL, the Directorate General of Hydrocarbons (DGH) and the petroleum ministry.
Sources told FE that ONGC has again conducted pressure tests at one of the four wells in the boundary area of the blocks. “The pressure has dropped by nearly 64% to 1,400 psi (pounds per square inch) now from earlier records of 3,900 psi. This clearly shows that gas has been taken out from the reservoir,” a senior official privy to the development, said.
In addition, ONGC earlier witnessed gas flows at 4.5 lakh cubic metres per day. However, the PSU explorer is now seeing more water coming out of the wells, which reconfirms that gas volumes have declined, the official explained.
Interestingly, ONGC wanted officials from upstream regulator DGH to monitor the well test results. However, DGH did not depute any official to review the tests conducted recently.
In response to an email query on the subject, RIL said, “D&M have been jointly appointed by ONGC and RIL under supervision of DGH to assess the issue of reservoir connectivity and submit a report. Technical data by both RIL and ONGC have been submitted to D&M for collation and arriving at a fair conclusion. Once the entire study is completed D&M will submit its report. Currently the matter is also sub-judice in Delhi High Court.”
The reports of the latest pressure test would be presented to ONGC’s board, which had earlier decided to take legal recourse to settle the issue.
International consultant DeGolyer and MacNaughton has been appointed by the parties to review the reservoir connectivity between the blocks of ONGC and RIL in the KG Basin. The report is expected in the next new few months.
In another development in the case, senior counsel Dushyant Dave, who in May last year filed ONGC’s petition in the Delhi High Court, has been replaced. At present, senior advocate Rajiv Nayar is representing ONGC for the case.
Meanwhile, RIL has asked the Delhi High Court to dismiss ONGC’s petition. According to the private explorer, the petition had become “infructuous” as an independent third party has been appointed to look into the issue. RIL is of the view that the dispute is “purely techno-commercial and contractual in nature” and need not be decided by the court.
ONGC’s block KG-DWN 98/2, which is yet to start production, lies next to RIL’s KG-DWN-98/3, commonly known as KG-D6. The Mukesh Ambani-controlled firm’s block has been in commercial production since 2009. The output from KG-D6 is hovering around 10-12 million standard cubic metres per day after it touched a peak of 67-68 mmscmd in 2010.
The PSU has demanded that a court-monitored independent agency be set up for serving the twofold purpose of establishing the continuity of reservoir across the two blocks and, secondly, for gas balancing in accordance with the rules and articles of the production sharing contract.