RIL unduly benefited from ONGC gas, says Shah panel

New Delhi: Reliance Industries derived “unjust benefit” as a result of gas flowing into its KG-D6 block from the adjacent field of state-run ONGC in the Krishna-Godavari basin, and is liable to pay compensation to the government, the Justice A P Shah panel has said.

The report, submitted to the oil ministry on Wednesday and put up on the ministry website the same evening, held RIL responsible for having “unfairly retained” the benefit and not disclosing the fact that the underground gas pools in both the blocks were interconnected.

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ONGC, which had moved the Delhi HC against RIL on the issue, too came in for sharp criticism, with Justice Shah suggesting a probe into the previous management’s lethargy in acting on information suggesting interconnected gas pools.

The one-man panel, under the retired Delhi HC chief justice, was appointed to suggest a way forward in the dispute. The panel was tasked to examine US-based oilfield reservoir consultant DeGolyer & MacNaughton’s report validating ONGC’s claim of gas from its block migrating to RIL’s fields since it went into production in 2009.

According to the D&M report, more than 11 billion cubic meters of gas, worth nearly Rs 11,000 crore, flowed from ONGC’s area to Reliance’s fields till March 2015. The report said the migration of gas after this date has to be ascertained. The Shah panel accepted the US consultant’s report in its entirety, rejecting Reliance’s objections over what it called “asymmetry in data”.

“The report has gone into economic and legal implications of the gas migration issue under the ambit of production sharing contract. You must give us an opportunity to go through it. The ministry has 30 days to take appropriate action,” oil minister Dharmendra Pradhan said after going over the report with Justice Shah for nearly an hour. The government's decision to put the report on the website was being seen by many as an indication of its willingness to act on the findings of the Shah panel.

RIL and ONGC spokespersons declined to comment, saying they were not privy to the report’s content when TOI contacted them before the report was made public. RIL has consistently denied doing any wro-ng, saying it had drilled wells within its own area and with approvals from authorities.The panel said the joint development, one of the ways such disputes are settled globally, as compensation would not work because of the short time left before production stops in Reliance’s producing fields. It seems the only option is for the government to decide the amount of compensation it wants to claim from Reliance. In all likelihood, the company will legally challenge any penalty or claim.