Reliance faces $1 billion penalty over KG basin episode
Reliance Industries Ltd and one of its partners could be slapped with a penalty of around $1 billion for exploiting migrated natural gas from an Oil and Natural Gas Corporation-owned block in the Krishna-Godavari basin for commercial purposes.
According to a report in Financial Express, the Directorate General of Hydrocarbons has submitted his report to the oil ministry last week, the latter is likely to issue a notice in this regard to the Mukesh Ambani-led firm later this week.
RIL is believed to have exploited the natural gas that migrated to its block from ONGC’s adjoining block. A November 2015 study by US-based consultant DeGolyer and MacNaughton noted that up to 11.122 billion cubic metres of natural gas had migrated from ONGC’s 98/2 area to the adjoining KG-D6 block of RIL in the Bay of Bengal between April 1, 2009, and March 31, 2015.
In a report on the matter submitted later, former Delhi High Court chief justice AP Shah said RIL can be fined based on either the value of the migrated gas produced, or to be produced, or on the profit it made from the enrichment, taking into consideration its expenses and sales figures. Shah, however, had clarified that ONGC did not have locus standi to make complicated claims against Ambani’s Reliance.
In July 2013, state-run ONGC brought the migration to the directorate’s notice. Reliance initially had denied ONGC’s claim of gas migration.