In the setback of Mukesh Ambanipe AmbanipeReliance Industries Ltd and its partner BP PLC, the Delhi High Court overturned the decision of the International Court of Arbitration, in which the duo was not liable for paying compensation for gas produced and sold. From adjacent fields.
This is the person who explains the entire conflict.
Question field:
Block or Area KG-DWN-98/3, known as KG-D6, was the first bid round under the new Exploration License Policy (NELP) by ATAL Bihari in 2000 with Reliance Industries Ltd and Niko Resources of Reliance Industries Ltd. It was awarded to the Niko Resources consortium. Vajpayee government. (BP bought 30% of the block’s shares over 10 years later).
In the same round, Block KG-DWN-98/2 (KG-D5) was awarded to Cairn Energy India Ltd, and was subsequently acquired by the National Oil and Natural Gas Corporation (ONGC) in two phases. In 1997, the adjacent Godavali block was awarded to the ONGC.
Reliance began outputting from the KG-D6 in 2009, while ONGC began outputting in January 2024.
Conflict
The conflict doubted the connectivity of the reservoirs in the KG-D5 and G-4 blocks and the connectivity of the reservoirs in Reliance, and when he wrote ONGC on July 22, 2023, DGH I wrote it in. Available data for Godavari and KG-DWN-98/2 blocks provide “evidence of lateral continuity of the gas pool” to KG-D6.
Simply put, it meant that it seemed to be related to the underground gas pools of the Reliance block and the ONGC block, and the possibility of gas transfer between the two.
And since Reliance first began production, it could have also eliminated ONGC resources.
ONGC requested the Director-General of Hydrocarbons (DGH), the upstream regulatory department of the Federal Department of Oil and Natural Gas, to provide G&G data along with production and well data for adjacent areas of block KG-DWN-98 . /3.
Media leak
The issue was leaked to the media, with a small news item appearing in one of the Dalies. Similar to material event practice, this was presented to the ONGC board of directors in April 2014. The board asked management to review and report the issue.
Election Day Petition
As the board had directed, the company’s management team returned with detailed reports. The board urged management to take legal action to protect its interests. The previous option for ONGC was to file a “theft” of gas with the FIR by trust or to file a civil lawsuit claiming damages. Criminal cases (FIR) have been excluded, but the board felt that civil cases could be dragged over for decades.
The exit was to file a warrant petition. This will be noted immediately by the High Court. However, warrants can only be filed with the state. Since DGH was a resource custodian and should have known connectivity issues when it approved Reliance’s detailed development plan, ONGC decided to file a warrant against DGH and the Ministry . Reliance was the third respondent.
The petition was filed in Delhi High Court on May 15, 2014 before counting general elections.
On September 10, 2014, the Delhi High Court disposed the ONGC petition and directed the government to make a decision after receiving reports from an independent panel set up by the ONGC and RIL.
I raised my eyebrows
The ONGC petition then raised some eyebrows. The Ministry of Oil ordered an investigation into whether the ONGC had consulted the ministry before filing a warrant petition against the largest stakeholders, the Indian Union and the upstream regulator DGH.
The ministry’s investigation revealed that the then co-secretary (exploration) Armangiridar “knows about the decision to file a warrant, but he was not entirely aware that the government had become the first respondent. It could be.”
Armane, who is also a member of the ONGC Board of Directors, which decided on April 24, 2014, said, “Not only mentions the issue to the Indian government, but also may not be of much help as Goi is considered a stakeholder. It was suggesting. There could be a conflict of interest.”
Third Party Consultants
DeGolyer and Mac Naughton (D&M) have been appointed to conduct third-party research. In its final report dated November 19, 2015, D&M concluded between ALIAs that “integrated analysis demonstrated the connectivity and continuity of the entire block of reservoirs operating by ONGC and trust.”
This report provides the amount of gas transferred from Godavari PML and KG-DWN-98/2 to the Kg-DWN-98/3 block, and gas production for each gas from the amount transferred from March 31, 2015. It has been quantified.
From April 1, 2009 to March 31, 2015, 700.9 billion cubic meters and 4.116 bcm of gas were found to be from the discovery of the Godavari PML and KG-DWN-98/2 blocks to the KG-DWN-98/3 blocks respectively. I’ve moved. Of these transferred gas volumes, 5.968 and 3.015 bcm of gas were produced by Reliance.
D&M even gave the value of the ONGC gas produced by Reliance – about 10,000 rupees.
Dispute Resolution Committee
After submitting the D&M report, the government formed a single-member committee on December 15, 2015, and former Supreme Court Justice of Ajit Prakash Shah, Delhi High Court, “quantifying unfair enrichment.” It was composed of.
In submission to the panel, ONGC said that Reliance and DGH knew about the fields they connected over a decade ago. I submitted another evaluation report prepared by D&M in 2003. This was included in NIKO’s annual disclosure to the Canadian Stock Exchange. This stated that “part of the accumulation of the field spans the western boundary of the block (ONGC).”
Trust and Nico said they had prior knowledge that the development plan in the KG Basin would deplete gas reserves in the ONGC block.
However, Reliance rejected this and told the Shah Committee that the report “simple considerations of seismic data and limits it to discover wells in block KG-DWN-98/3 (block kg-D6) “This reflects very limited well data.” Rather, it relies on the general experience of D&M in geology.”
“Up to this point, ONGC had still drilled wells and had not discovered any hydrocarbons in the area,” Reliance told the committee.
“As RIL explained to the committee, seismic data may suggest continuity of channels across block boundaries, but it is entirely possible to establish the existence of reservoir-reservoir connectivity. Insufficient. The committee determined in its August 28, 2016 report that gas had flowed from the ONGC block into the Reliance area but that no criminality was found in some of the Mukeshuanbani companies.
On the issue of unfair enrichment, the committee concluded that the Indian government, not the ONGC, is entitled to claim compensation from dependence for the unfair interests received.
ONGC has no ownership or ownership rights to natural gas, so there is no presence that will result in any illegal claims about trust in trespassing/conversion. All mineral resources are property of the Indian government.
It relied on reports produced by oil industry consultant D&M. D&M concluded that the gas had moved from the ONGC control section on the seabed, and the geological layers below it had moved into areas controlled by private companies. But at that point, Reliance had said that the method was flawed.
Trust penalty
Using Shah Report, the government asked the ONGC to aside and take over the issue.
On November 4th, 2026, the Ministry of Oil and Natural Gas (MOPNG) announced that on March 31st, 2016, the Ministry of Oil and Natural Gas (MOPNG) will be 1.4 billion to partners to produce 7 years of gas units, which is approximately 338.3332 million in the UK heat unit. He demanded US$70 million and banished him from Reliance and his partners. It penetrated or migrated to adjacent KG-D6 from the block of ONGC in the Bay of Bengal.
After deducting the royalties of USD 71.71 million paid to gas produced, adding 2% to the LIBOR ratio, a total of USD 149.86 million, 1.55 billion against Reliance, BP and Niko A total demand of 1,000 USD has been imposed.
The government also forced the KG-D6 to pay an additional profit of USD 174.9 million in oil after certain costs were allowed, as the output of the KG-D6 is lower than the target.
At the time, Reliance disputed the government’s request as “a misreading and misunderstanding of key elements of the PSC,” saying such demands are unprecedented in the oil and gas industry.
arbitration
It was the government who slapped the notice, so Reliance found it convenient to go to arbitration. (Arbitration is a dispute resolution mechanism based on a signed contract. Reliance and partners have a KG-D6 signed production sharing agreement with the government where arbitration is defined as a mechanism for dispute resolution. 2 people had no signed contracts and no dispute resolution mechanisms.
On November 11, 2016, Reliance and its partners slapped the arbitration notice.
Arbitration Award
In July 2018, the International Court of Arbitration rejected the Indian government’s claim of USD 15.5 billion against the Reliance Industry and its partners. The three-person panel, 2-1 majority, also awarded the three partners US$8.3 million in compensation.
The panel is Singapore-based arbitrator Lawrence Boo, a professor at universities in China, Australia and Singapore, and head of the Singapore-based arbitration office. The other two members were government arbitrators, former Supreme Court judge GS Singhvi, and arbitrators designated by Reliance.
