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Shah Panel to Probe ONGC-RIL Gas Row
Dec 24, 2015

A committee under Law Commission chairman A.P.Shah, has been set up to recommend compensation to ONGC to protect the government interest following American consultant's report on its natural gas from its Bay of Bengal block migrating to adjoining fields of Reliance Industries (RIL)

  • Petroleum Ministry received the report of D&M (DeGolyer and MacNaughton) on November 30. 

  • D&M report has talked about some technical things like flowing of gas from ONGC's blocks to adjacent Reliance block.

  • The D&M report says 11.122 billion cubic meters (bcm) of ONGC gas has migrated from Godavari Producing Mining Lease PML and KG-DWN-98/2 (KG-D5) in Krishna Godavari basin to Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) block of RIL, as the reservoirs in question are connected.

  • The Shah panel has been constituted to understand the financial implications and to protect the interest of the government and government companies.

  • The committee's terms of reference include, to "quantify the unfair enrichment, if any, to the contractors of the adjacent block KG-DWN-98/3 (KG-D6) and measures to prevent future unfair enrichment to these contractors on account of gas migration."

  • The one-man committee will submit its report in three months on "how to compensate the losses keeping in mind the legal and business aspects."

  • The panel has been asked to report any "acts of omission and commission" on the part of all stakeholders including RIL, ONGC, the Directorate General of Hydrocarbons and the government.

  • The government will act after the commission submits the report in three months.

  • 58.68 bcm of gas produced from KG-D6 block since April 1, 2009, 49.69 bcm belongs to RIL and 8.981 bcm could have come from the ONGC's side.

  • At gas price of $4.2 per million British thermal unit, the volume of gas belonging to ONGC which RIL has produced comes out to worth $1.7 billion (Rs.11,055 crore).

  • ONGC had moved the High Court here alleging that RIL extracted gas upto 18 billion cubic meters (bcm) from ONGC blocks, resulting in loss of several thousand crores of rupees.

  • In October, RIL had said it has "scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the KG-D6 Block." It said all its wells were drilled "strictly within the KG-D6 block boundaries, as per the Development Plan approved by the relevant authorities under the PSC (production sharing contract)."

  • D&M was jointly appointed by ONGC and RIL to investigate and submit a report on the matter.


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