BP at odds with partner Reliance Industries on Krishna-Godavari arbitration

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New Delhi | Updated: January 16, 2016 12:33:32 AM

In a curious turn of events, UK-based BP, which partners Reliance Industries (RIL) in the Krishna-Godavari Basin deep-water block KG-DWN-98/3, has decided to cooperate with the AP Shah panel on the dispute over alleged theft of gas from adjacent ONGC field, although RIL had questioned the jurisdiction of the panel and sought arbitration.

In a curious turn of events, UK-based BP, which partners Reliance Industries (RIL) in the Krishna-Godavari Basin deep-water block KG-DWN-98/3, has decided to cooperate with the AP Shah panel on the dispute over alleged theft of gas from adjacent ONGC field, although RIL had questioned the jurisdiction of the panel and sought arbitration.

An official privy to the development told FE that BP would participate in the deliberations of the panel, the next meeting of which is expected in February. RIL and its other associate in KG-DWN-98/3m Canada-based Niko Resources, would likely stay away.

“We thank the government and the committee chaired by Justice (Retd) AP Shah for inviting us to participate in the committee proceedings. We confirm informing the committee of our willingness to cooperate,” a BP spokesperson said.

Shah, a former chief justice of the Delhi High Court, has been assigned by the petroleum ministry to study the findings of US-based consultant DeGolyer and MacNaughton (D&M) in the matter and recommend the future course of action.

The petroleum ministry is of the view that D&M gave only a technical report on the row and so, the judicial and financial implications of the dispute still needed to assessed. The D&M study is reported to have said that nearly 11.1 billion cubic metres (bcm) of gas migrated from ONGC’s G4PML and 98/2 discoveries to the RIL acreage. Of this, the private explorer is believed to have commercially drilled nearly 8.2 bcm of gas and sold it to customers.

RIL and Niko had separately written to the petroleum ministry, saying that they would prefer the matter to be settled via arbitration. ONGC, on its part, has expressed “concerns” over the confidentiality of the deliberations, as one partner is participating, while other two are not. “The concerns of ONGC are genuine. But Shah assured all the stakeholders that there would not be any reasons for worry,” an official said.

ONGC moved the Delhi High Court 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 oil or gas from its block. On September 10, the high court disposed of ONGC’s petition and directed the government to take a decision within six months after it receives a report from the independent panel.

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