The government has slapped a $2.81 billion (about Rs 24,500 crore) demand notice on Reliance Industries and its partners, including BP Plc for gains made from producing and selling natural gas that may have migrated from neighbouring block of state-owned ONGC. This follows the Delhi high court's decision on February 14, overturning an international arbitration tribunal ruling that held the duo not responsible for paying any compensation for the gas they produced and sold which had allegedly migrated from adjoining fields.
The Delhi high court (HC) division Bench on Thursday sought a response from Reliance Industries (RIL) and others regarding the government's appeal against the Mukesh Ambani-owned conglomerate and others for fraudulently and unjustly enriching themselves by draining gas from their deposits, amounting to over $1.5 billion. The Centre had appealed against the single-judge Bench order of the Delhi HC on May 9, which had dismissed its petition. Justice Anup Jairam Bhambhani had upheld the international arbitration award of July 24, 2018, in favour of the RIL-led consortium. The consortium includes UK-based BP Plc and Niko Resources of Canada.
RIL had drawn 58.67 bcm of gas from four wells.
Dispute resolution provisions in the production sharing contract remained unimplemented, while the regulator faltered, points out Jyoti Mukul.
While government/PSU procedures focus on piece meal & individual tenders taken on standalone basis, avoiding delays and cost of not doing things becomes a primary consideration in PSC procurement
Reliance Industries Ltd (RIL) on Wednesday asserted in the Supreme Court that it did not receive any favour from the government in the contract for exploration of oil and gas from Krishna-Godavari basin.
CAG, in the third round of audit of KG-D6 as well as three other oil and gas fields, on November 11 wrote to RIL seeking records to audit spending in 2012-13.
Gas pricing guidelines stipulate that a new gas price will apply to all producers except RIL.
Govt plans to stop RIL from selling crude to Jamnagar refinery.
A market-based gas pricing regime is to kick-in from next month.
Contract does not provide for retrospective penalty for 'such' acts
Moily said several gas fields of both RIL and state-owned Oil and Natural Gas Corp were economically unviable to produce at current rate of $4.2 per million British thermal unit.
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While the Cabinet has approved doubling of gas price from April 1 next year, Oil Ministry is proposing that old rates of $4.2 per million British thermal unit apply to gas from D1/D3 and MA fields in eastern offshore KG-D6 block till it proved that RIL had proved less than targets only because of geological factors.
It calculated that the government should have got an additional profit share of $ 115.263 million.
In the 38-page report, across 10 chapters, RIL explained how it entered the exploration and production business; the history of the New Exploration and Licensing Policy and the introduction of production-sharing contracts.
Oil Min rejects RIL arbitration notice.
Gas price hike seems to be a distant dream for Reliance Industries and its partners--Niko Resources and BP.
They also voiced concerns over a double penalty being sought to be imposed on them for KG-D6 fields output not matching targets.
A bench headed by Chief Justice P Sathasivam sought response from CBI on the petition filed by Civil society members including former Cabinet Secretary T S R Subramanian and ex-Naval chief Admiral L Ramdas seeking probe by the agency in the alleged 'collusion between RIL and the political establishment'.
Sources said the Cabinet had in December last year stipulated that the new gas rate will apply to all producers excepting eastern offshore KG-D6 block where the contractor, which is fighting government against levying penalties for output shortfall, will have to give bank guarantees equivalent to the incremental revenue it would get from the new rates.
The government on Thursday decided to join the arbitration initiated by Reliance Industries and its partners over delay in revision of natural gas prices, and named former Supreme Court judge G S Singhvi as its arbitrator.
While a new formula for pricing of all domestically produced natural gas was notified on January 10 and published in Gazettee on January 17, the Election Commission last month asked the government to defer its implementation till general elections are completed.
The govt auditor also indicts DGH and management committee of D1 and D3 fields
Reliance Industries has accused CAG of exceeding its brief in the audit of spending on eastern offshore KG-D6 block saying hindsight is being used to question operational decisions taken 8 years back.
Reliance Industries on Friday hit out at Oil and Natural Gas Corp (ONGC) for suing it over KG gas dispute, saying some elements in the state-owned firm may be "misleading" the chairman D K Sarraf to hide their failure in developing the discoveries made over 13 years.
CAG had in its previous reports slammed Oil Ministry and its technical arm DGH for not exercising enough control and vigil over KG-D6 block.
The affidavit came in response to the government moving the Delhi high court seeking to block Reliance selling 20 per cent stake in its oil and chemical business to Saudi Aramco for $15 billion, in view of pending dues of $3.5 billion in Panna-Mukta and Tapti oil and gas fields. Countering the charges, RIL said it was a 'falsehood' and the petition is an abuse of process.
The Oil Ministry is seeking Cabinet nod to allow Reliance Industries to retain three gas discoveries worth $1.45 billion in the eastern offshore KG-D6 block even after expiry of timelines.
RIL's Dhirubhai-34, or R-Cluster field, in the flagging KG-D6 block was to produce about 13 million standard cubic metres per day of gas, equivalent to present day output from D1&D3 as well as MA fields, by 2017-18.
Reliance Industries Ltd (RIL) said on Wednesday that the government's move to disallow it recovery of certain costs relating to the D6 gas block in the Krishna-Godavari basin (KG-D6) did not amount to a penalty and was also not in line with the contract the two had signed.
The government has formed a four-member panel of secretaries to suggest a new gas pricing mechanism.
Government has set $4.20-per million British thermal unit as the selling price for D6 gas, but the Bombay high court last month asked RIL to supply gas to firms run by Anil Ambani Group at $2.34 per mmBtu, 44 per cent lower than the price fixed by the government.
In a presentation to investors in Mumbai last week, Aramane Giridhar, Joint Secretary (Exploration) gave detailed reasons for pendency of decisions in the Ministry of Petroleum and Natural Gas where officials approved of decisions but refused to issue formal orders, resulting in delays in production of oil and gas.
Amidst controversy over fall in output from RIL's KG-D6 gas fields, Directorate General of Hydrocarbons (DGH) on Wednesday appeared to favour scrapping the present system of contracts and instead asking firms to bid for the share of oil and gas they can offer to the government.
The output was behind target in 2015-16 as well and the government is yet to issue a cost disallowance notice for that
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.
Government had proposed a revised investment plan for the main gas fields in the KG-D6 block.
Reliance Industries on Saturday said it had never contested the government's right to get the company's spending on KG-D6 gas fields audited by the Comptroller and Auditor General but hoped it will not be subjected to a performance audit."RIL has at no time contested the government's right to conduct an audit by any agency, including the CAG, as provided in Section 1.9 of the Accounting Procedure of the PSC," the company said in a statement on Saturday evening.
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The 25-year production sharing contract, however, ends in 2029.
RIL has denied knowingly producing any gas from the ONGC block
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