Arbitration award in Reliance-ONGC gas row in July

An international arbitration tribunal has concluded hearing in the $1.55 billion claims made against Reliance Industries (RIL) and its partners for allegedly siphoning gas from deposits they had no right to exploit and is expected to pronounce a judgement next month.

The panel headed by Singapore-based arbitrator Lawrence Boo has concluded hearings on the validity of the government's demand that RIL and its partners BP of UK and Canada's Niko Resources pay for "unfairly" producing natural gas belonging to state-owned Oil and Natural Gas Corp (ONGC), sources privy to the development said. The three-member panel is likely to give its award in July, they said.

Boo, a professor at universities in China, Australia and Singapore, and head of the Singapore-based Arbitration Chambers, was last year appointed as president of the tribunal by its two other members -- government's arbitrator and former Supreme Court Judge G S Singhvi and Reliance-appointed arbitrator, former English High Court Justice Bernard Eder. The oil ministry on November 4, 2016, slapped a demand of $1.47 billion on RIL-BP-Niko combine for producing in seven years ending March 31, 2016 about 338.332 million British thermal units of gas that had seeped or migrated from ONGC's blocks into their adjoining KG-D6 in the Bay of Bengal.

After deducting $71.71 million royalty paid on the gas produced and adding an interest at the rate of LIBOR plus 2 per cent, totalling $149.86 million, a total demand of $1.55 billion was made on Reliance, BP and Niko.

At the time, RIL disputed the government's demand as being based on a "misreading and misinterpretation of key elements of the PSC," and it said that such a demand was without precedent in the oil and gas industry. It on November 11, 2016, slapped an arbitration notice.