India Sets 1-Month Deadline to Tackle ONGC-Reliance Gas Dispute

  • Independent report finds ONGC gas migrated to Reliance block
  • Government to decide on resolution by Sept. 30: oil minister

India has set a one-month deadline to begin implementing steps to resolve a dispute over natural gas that migrated from Oil & Natural Corp.’s offshore block in the Bay of Bengal to the adjoining assets of Reliance Industries Ltd.

Oil Minister Dharmendra Pradhan said Wednesday that a government panel has endorsed findings by an outside consultant that studied how some gas produced from Reliance’s KG-D6 block had come from ONGC’s adjacent KG-DWN-98/2 block in the Krishna-Godavari basin off India’s east coast.

Reliance and ONGC didn’t respond to e-mails and phone calls seeking comment.

The government set up in December a one-member panel headed by Ajit Prakash Shah, a former chief justice of Delhi High Court, to determine whether ONGC should be compensated, and by how much. He was asked to examine an independent study done by DeGolyer & MacNaughton, a petroleum industry consultant, on the reservoirs in exploration blocks held by ONGC and Reliance Industries.

“Justice Shah has given a comprehensive report, everything is there in the report," Pradhan said. Shah “looked into the economic and legal implications of gas migration.”

The report suggests a future course of action, Shah told reporters at a briefing with the minister on Wednesday, declining to provide details.

ONGC, the country’s biggest producer, sued Reliance Industries in May 2015, claiming the company had drawn a “substantial” volume of natural gas from the block. Production from Reliance’s KG-D6 block has slumped to about 8.7 million cubic meters a day from more than 60 million in 2010. Reliance says the reservoir has proved to be more difficult that it had expected.