RIL U-turn on gas row; will participate in Shah panel's proceedings

In a significant U-turn in its approach towards the ongoing gas dispute with state-run Oil and Natural Gas Corporation (ONGC), the Mukesh Ambani-controlled Reliance Industries Ltd (RIL) has decided to participate in the proceedings of the government-appointed Shah Committee that is looking into the matter.

“The second meeting of the Shah Committee was held a couple of days ago. RIL attended the meeting and (its representatives) said we would like to participate. Niko Resources also participated,” ONGC Chairman D K Sarraf told a media gathering while announcing the company’s third quarter results. He was responding to a question on the status of the controversial gas dispute.

An RIL spokesperson refused to comment. The company did not respond to an e-mail query. The company had earlier told the panel it does not accept that the Government of India can appoint a ‘committee’, or the government can deal with any issues on the dispute by constituting a committee, according to officials. It had contended the Shah panel has no power to adjudicate any matters or issues concerning the claims of ONGC and its recommendations would not be binding on it.

Sarraf added the committee in the last meeting gave both RIL and NIko Resources three weeks time to submit their views on the gas row which will be shared with all the interested parties including the oil ministry, the Directorate General of Hydrocarbons, RIL and its partners, BP and Niko. “ONGC has also been given a further two weeks time to respond, after which the next meeting will take place on 19 March,” he said.

RIL’s other partner, British oil giant BP, had last month said it would cooperate in the proceedings of the panel in order to resolve the issue “with the objective of delivering mutual value”. BP’s stand had fuelled speculation over a possible rift between RIL and BP over the matter.

Both RIL and ONGC are engaged in a battle over ONGC’s claim that RIL extracted natural gas from ONGC’s KG-D5 block in the Krishna-Godavari basin off the Andhra coast. The Delhi High Court had last year dismissed ONGC’s appeal for compensation and gave the government six months to take action on a report on the matter by international consultant DeGolyer & MacNaughton.

D&M, in its November 30 report, established reservoirs in ONGC’s KG basin blocks KG-DWN-98/2 (KG-D5) and the Godavari-PML are connected with Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) Block of RIL. It said as much as 11.122 billion cubic meters of natural gas may have migrated from idling fields of ONGC to adjoining KG-D6 block of RIL.

The oil ministry had later set up the single-member judicial panel headed by A P Shah, former Chief Justice of the Delhi High Court, with the mandate to “quantify unfair enrichment”, if any, to the contractor of the KG-D6 block.