How ministry helped Reliance with $1.5bn fine

Vol 20, PW 5 (17 Nov 16) People & Policy

Whispers are circulating that the oil ministry has inadvertently helped Reliance against ONGC in the gas migration dispute with some speculating it is secretly backing the company.

At first glance you'd think the ministry is taking a hard line against Reliance and partners BP and Niko Resources with its November 4 notice demanding $1.55bn for gas which migrated from KG-DWN-98/2 operated by ONGC to KG-DWN-98/3 operated by Reliance, BP and Niko. Reliance and partners have 30 days from November 4 to respond but an ONGC source says that by directly issuing a notice to Reliance the ministry has given the Mumbai-based operator the perfect opportunity to delay the matter by triggering arbitration proceedings.

This could take at least two to three years to resolve and the case could still go to court. In the meantime ONGC's reservoir will continue to be drained.

Our source says it would have been better if ONGC had issued the claim to Reliance directly as the matter would have been between two companies and ONGC could have easily proved its case in court. "ONGC should have filed the case against Reliance," we hear.

"The matter could have been solved easily. The Shah committee report confirmed 'unjust enrichment' by Reliance.

ONGC only needs to prove Reliance drilled the wells intentionally."