KG Basin gas: Oil Min asks DGH to work out penalty on Reliance

AFTER THE A P Shah panel’s conclusion that Reliance Industries’ (RIL) production of migrated gas from the adjacent block of ONGC and retention of the ensuing benefits amount to ‘unjust enrichment’, the petroleum ministry has tasked its technical arm — the Directorate General of Hydrocarbons (DGH) — to compute the penalty to be levied on RIL. “DGH will be asked to calculate the amount. They will calculate the amount within one month. Then, they will serve the notice,” petroleum minister Dharmendra Pradhan said on Friday.

Pradhan told mediapersons that the government accepted the Shah commission’s recommendations entirely. “Yes, we will seek compensation. That needs to be quantified. Fact of the matter has been established. There has been migration. There are some protocols on how to look into the issue,” Pradhan reiterated. ONGC had brought up the issue that RIL has been pumping out gas from its KG-DWN-98/2 block in the Krishna Godavari basin. RIL owns the adjacent block, KG-DWN-98/3.

The Shah panel had said that ONGC had locus standi to bring a tortious claim against RIL. Shah in his report also said that the quantification of unjust enrichment can either be based on the monetary value of the migrated gas produced, and to be produced, by RIL or it can be the profits earned by RIL, after taking into account its costs and sales figures.

ONGC and DGH argued that the quantification of unfair enrichment has to be based on the monetary value of the migrated gas produced by RIL. Conversely, RIL argued that it is entitled to recover the development, drilling and facilities costs and operating costs for the migrated gas and to take into account its sales figures. FE