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Rediff.com  » Business » Gas dispute between ONGC and Reliance: Who's at fault?

Gas dispute between ONGC and Reliance: Who's at fault?

October 09, 2015 09:23 IST

RIL has maintained it had followed the production sharing contract (PSC) in letter and spirit and done no wrong and it has drilled all wells within its boundary.

Some natural gas from the fields of Oil and Natural Gas Corp (ONGC) in the Bay of Bengal might have flown out through the adjoining, connected KG-D6 fields of Reliance Industries Ltd (RIL), said a PTI report quoting US consultant DeGolyer and MacNaughton’s (D&M) preliminary observations.

Unconfirmed media reports on the development pulled down the RIL stock 2.7 per cent to Rs 889.15 on BSE on Thursday. The stock hit a low of Rs 886.6 at 3:15 pm, tumbling from its intra-day high of Rs 915.

Weakness in the stock, which was the worst performer among the 30 Sensex components on Thursday, pulled down the company’s market valuation by Rs 7,817.22 crore to Rs 2,87,944.78 crore. At NSE, the shares ended at Rs 889.10, down 2.7 per cent.

An RIL spokesperson said the company had not received any draft report from D&M. A petroleum ministry spokesperson also denied any knowledge of the draft report being filed to the ministry.

The preliminary observations reportedly state ONGC’s G-4 block is contiguous to RIL-operated block KG-DWN-98/3 (KG-D6), according to sources.

D&M is expected to give a report soon, which will be vital to the dispute between the two companies, evaluating the possible continuity of channel and reservoirs across block boundaries and estimating the volume of gas in case reservoir continuity is established.

The consultant was jointly appointed by ONGC and RIL ascertain whether the neighbouring fields are connected.

According to sources, D&M feels that there is no unconnected area in G-4- that is, there exists no independent gas reservoir in the ONGC block and all the resources are shared with KG-D6.

ONGC Chairman D K Sarraf did not return calls seeking comment. The state-run explorer had in 2013 claimed RIL had deliberately drilled wells close to the common boundary of the blocks and some gas it pumped out was from its adjoining block.

RIL has maintained it had followed the production sharing contract (PSC) in letter and spirit and done no wrong and it has drilled all wells within its boundary.

Sources said D&M has had seven sittings with officials of the firms as well as the Directorate General of Hydrocarbons, the latest one being this week in Dallas, US, when it studied data of the two blocks and reservoir pressure tests conducted by ONGC last year.

PTI said according to D&M, RIL had drawn 58.67 billion cubic metres of gas from the wells up to March 31, out of which 11.9 bcm may belong to ONGC. It is likely to submit its report on the issue by next month.

The Delhi High Court had last month disposed of the ONGC petition, asking the company to wait for six months for the government to take action on the consultant’s report after it was submitted.

According to the Oil and Natural Gas Corporation of India, RIL's D6-A5, D6-A9 and D6-A13 wells drilled close to the block boundary may be draining gas from the G-4 field, while the D6-B8 well may be draining gas from DWN-D-1 field of KG-DWN-98/2 block.

D&M has established connectivity between G-4 and KG-D6 but has so far not said anything on connectivity with KG-D5, sources said.

(Inputs from PTI)

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