However, it states that ONGC has no right on the restitution and no locus standi to bring a “tortious claim against RIL for trespass/conversion since it does not have any ownership rights or possessory interest in the natural gas.” The committee did not quantify the restitution, leaving it to the government to decide. It said whatever benefit RIL received in terms of the migrated gas is liable to be returned to the government.testing.. we are here....
The panel said it faced limitations in providing a figure to the final value of the migrated gas produced by RIL during the term of its lease, because of the lack of data and the committee’s inherent technical limitations. “While the D&M (DeGolyer and MacNaughton) Report has to form the basis for the migration of gas up till 2015, subsequent migration of gas post-2015 has to be inquired into by the Government of India,” it said.
The one-man panel’s report agreed with the findings of D&M’s report submitted in November 2015, which stated that about 11.12 billion cubic metres (bcm) of natural gas worth about Rs 11,000 crore had migrated to the RIL fields from ONGC’s idle fields.
The Shah panel’s observation that RIL’s production of migrated gas and retention of the ensuing benefits amounted to unjust enrichment was based on the premise that in the absence of an order on joint development under the production sharing contract (PSC), a contractor was not permitted to produce and sell migrated gas. There is also no other extra-contractual right granted to the contractor that enables it to produce gas, regardless of its source. It also highlighted that though RIL had the option to go for joint development, it did not pursue this.
“It had not been given the migrated gas as a gift or largesse, its actions had no lawful justification and amounted to unjust enrichment,” said Shah in his report.
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Shah also asked the Ministry of Petroleum and Natural Gas and the Directorate General of Hydrocarbons (DGH) to review and strengthen the disclosure system by imposing penalties for deliberate suppression of material information. Training guns on ONGC, the panel said the role of ONGC in the Indian oil and natural gas sector must be assessed with great scrutiny. “The long periods of alleged inactivity on the part of ONGC in this case particularly must be examined further,” it added.
Petroleum Minister Dharmendra Pradhan said the report confirms that there was migration of gas from ONGC’s fields to RIL’s. “We will look into the recommendations of the report and take a call by September 30.”
The report says RIL had knowledge about the possible migration in 2003, ONGC too had prior understanding about the continuity way back in 2007 and took up the matter only six years later. The Shah panel recommended further inquiry into the prior knowledge.
The panel concurred with the recommendation made by BP regarding the creation of a mechanism to amicably resolve disputes among parties as and when they arise. “Such a mechanism will help reduce the occurrence of disputes between parties, and allow for smoother functioning of the energy sector, which is ultimately in the interest of the nation,” the report said. The government would have to take a decision by September 30. The Delhi High Court had last year ordered the government to take an action within a month of submission of the report. The court was hearing an ONGC petition filed in May 2014, days before the National Democratic Alliance government assumed office. ONGC had made both RIL and the government a party to the case. The mandate of the panel was to quantify the amount of migration of gas from ONGC’s field and recommend actions based on that. It was also tasked with looking into any acts of “omissions and commission” committed by any of the stakeholders. The panel was to “quantify unfair enrichment if any” by RIL and recommend ways to compensate ONGC.
The Shah panel, set up on December 15, 2015, had got a month’s extension after it failed to meet the deadline of July 31. This was the second extension that the panel had got, as the initial deadline was March 31. The delay occurred after RIL and its partner Niko Resources questioned the constitution of the panel and declined to participate. However, both agreed to join the inquiry in February.
According to ONGC, RIL benefited from gas flow between their adjacent fields between 2009 and 2013. It was in 2013 that ONGC came out with the claim that RIL intentionally drilled wells close to its blocks, through which the gas had migrated. Subsequently, D&M was appointed by both RIL and ONGC to study the issue. According to D&M’s report, the reservoirs in ONGC’s KG-DWN-98/2 (KG-D5) and the Godavari-PML are connected with Dhirubhai-1 and 3 (D1 & D3) fields located in the KG-DWN-98/3 (KG-D6) block of RIL. The estimate of ONGC’s loss was based on a gas price of $4.2 per million British thermal unit.
D&M said out of the 58.68 bcm of gas produced from the KG-D6 block since April 1, 2009, 8.98 bcm could have migrated from ONGC’s fields. RIL’s D1 and D3 fields had estimated reserves of 80.70 bcm, while ONGC’s Godavari-PML had 14.21 bcm of reserves and KG-D5 another 11.86 bcm.