AP Shah to look into ONGC-Reliance Industries row on KG gas

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New Delhi | Published: December 17, 2015 1:33:28 AM

Against the backdrop of the finding of US-based consultant DeGolyer and MacNaughton (D&M) that underground reservoirs of adjacent oil and gas blocks in the Krishna-Godavari Basin...

Against the backdrop of the finding of US-based consultant DeGolyer and MacNaughton (D&M) that underground reservoirs of adjacent oil and gas blocks in the Krishna-Godavari Basin belonging to state-run Oil and Natural Gas Corporation (ONGC) and Reliance Industries (RIL) were connected, the petroleum ministry on Wednesday set
up a one-member committee under retired justice Ajit Prakash Shah to recommend resolution of the issue, reports
fe Bureau in New Delhi. The committee will submit its report in three months.

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 D1/E1 discoveries in the 98/2 area to RIL acreage. Of this, the private explorer is believed to have commercially drilled nearly 8.2 bcm of gas and sold it to customers.

According to the ministry, the committee will consider “legal, financial and contractual provision including those contained in oilfields regulations and development act, petroleum and natural gas rules and concerned production sharing contracts (PSC) etc” and recommend “action to be taken” by the government based on the consultant’s report.

“The committee’s terms of reference also includes quantifying any ‘unfair enrichment’ to RIL, the actors of the adjacent block KG-DWN-98/3 and recommend measures to prevent such eventualities due to gas migration in future,” petroleum minister Dharmendra Pradhan told FE, Also, the Shah committee would delve into any acts of omission and commission on part of the stakeholders including RIL, ONGC, Directorate General of Hydrocarbons and the government.

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 Delhi High Court 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.

ONGC has already made its case stronger after it brought to the limelight modular dynamic tests (MDT) conducted by it through an independent and reputed service provider for evaluating current reservoir pressures in the wells G-4-3 and G-4-2 in the Godavari PML in January and February, respectively, which have revealed significant depletion in the pressure in the reservoirs.

Though there have been cases of joint field developments in India, this would be for the first time that two explorers are finding themselves at loggerheads. On October 20, FE reported that while ONGC and RIL have battled over the latter allegedly taking away gas worth about Rs 8,500 crore from the state-run explorer’s portion of the KG Basin, an over three-year-old arrangement has existed between the PSU and Cairn India under which the Vedanta Group firm processes not just its own but also the PSU’s share of Cambay Basin gas.

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