Vol. XL No. 40 October 02, 2016

RIL’s Gas Thieving & How It Escaped Punishment

J S Majumdar

SOON after Modi government came to power at the centre in 2014, the union ministry of petroleum and natural gas under Dharmendra Pradhan submitted a petition before Delhi High Court pleading for rejection of the complaint petition of the government’s own Navratna company ONGC against Reliance Industries Ltd (RIL) for illegitimately drawing thousands of crores of rupees worth of natural gas from the ONGC’s block in KG basin.

The ministry’s pleading said that the ONGC’s complaint was ‘frivolous’ and ‘belated’. It was for the Court to decide as to whether the ONGC’s petition was ‘frivolous’ and ‘belated’ or not. However, the ministry sat on the judgment because the company belongs to Mukesh Ambani.   

On August 20, 2014, CITU general secretary Tapan Sen, MP wrote to the union minister Dharmendra Pradhan on this arguing that ONGC’s complaint was based on proper techno-geophysical findings and questioned as to whether ministry’s conclusion that the ONGC petition was ‘frivolous’ was based on proper techno-geophysical examination by the ministry or not.

As for ‘belated’ complaint, it is the ministry which is responsible for this. ONGC had been regularly submitting reports of geological and geophysical data of all the relevant blocks on KG-DWN-98/3 and G-4 Godavari and KGDWN-98/2 blocks to the ministry and to the Director General of Hydrocarbons (DGH) since long. Having no response from the ministry, ONGC was forced to file complaint before the High Court.

Now, Justice A P Shah Committee’s report to the government on this dispute between ONGC and RIL proved that the ministry’s petition before Delhi High Court saying that ONGC’s petition was ‘frivolous’ was false and was for “unfair enrichment” to the RIL.

Justice A P Shah Committee’s report said that RIL retaining the gains of the gas which flowed into its KG D6 field from adjacent fields of ONGC was ‘unfair enrichment’ to RIL. During April 1, 2009-March 31, 2015 about 8.9 bcm of gas was appropriated by the RIL. This confirmed the facts in the ONGC petition before the Delhi High Court.

Shah Committee’s report accused both ONGC and RIL for not bringing these facts before the DGH. It shows that the government has not placed full facts before the Shah Committee. RIL had reason to conceal the facts because it gained ‘unfair enrichment’. As far as the ONGC is concerned, the same is not true.

In his letter of June 12, 2014 to the union minister for petroleum and natural gas Dharmendra Pradhan, Tapan Sen pointed out that the ONGC has filed a petition before the Delhi High Court stating that since 2009, RIL pumped natural gas to the tune of 18 billion cubic metres (bcm), worth Rs 30,000 crores, from the ONGC’s reservoir, which is close to the common boundary of RIL’s gas blocks in Krishna-Godavari basin. ONGC found that some of RIL’s wells, drilled adjacent to the boundary block, have been drawing gas from ONGC’s field. In its petition, ONGC alleged that Directorate General of Hydrocarbons cleared RIL’s field development plan of drilling wells nearly 50 to 350 metres inside ONGC block from the common boundary. The ministry of petroleum and natural gas and RIL did not adhere to the globally-accepted mechanism stipulated in the production-sharing contract signed by the ministry and RIL for block KG-DWN-98/3.

ONGC petition also said that the ministry was regularly apprised of the joint meetings between RIL and ONGC, conducted by DGH, on sharing geological and geophysical data of their blocks KG-DWN-98/3, and G-4 Godavari and KG-DWN-98/2 blocks. ONGC had approached the Directorate General of Hydrocarbons (DGH) long back with a request to share production and well data of KG-D6 field for analysing if the reservoir of the neighbouring field had same and continuous gas pool. But DGH “the watchdog failed to take steps to prevent such a situation, resulting in loss of crores of rupees to ONGC,” the petition noted. The government did not follow the internationally accepted global norm for joint development that had been provided for in the Production Sharing Contract (PSC). (The Working Class July-September, 2014)

Shah Committee report said that the government is eligible for compensation. Oil minister Dharmendra Pradhan told reporters that the government would take action by the end of September, 2016.

Press reports say that RIL’s partner BP, which has a 30 percent stake in Reliance’s 21 gas blocks, including in the KG D6, said “it was looking forward to an amicable resolution of the issue.” Going beyond the terms of reference, the Shah Committee “supported BP’s recommendation for creation of a mechanism to amicably resolve disputes among parties,” they say.

For future, as reported by the press, the government on March 10, 2016 replaced ‘profit-sharing’ by ‘revenue-sharing’ formula prospectively giving liberty to RIL like companies to manage gas field operations without close regulatory intervention!