Panel faults both Reliance Industries, ONGC in gas dispute, minister promises quick action

New Delhi: The Justice A.P.Shah Committee on the gas migration dispute between the state-run Oil and Natural Gas Corp and Reliance Industries has faulted both the entities for errors of omission and commission, even as the government promised appropriate action by mid-September.

The report, made available late on Wednesday, said Reliance Industries did benefit unduly -- terming it as enrichment -- from the gas that migrated to its fields in the Krishna-Godavari basin in the Bay of Bengal from those of the state-run firm.

But the committee also said it was not able to ascertain in clear terms if the two companies, indeed, have prior knowledge. "I wanted this to be probed further," the single-member panel said.

Yet, it observed, based on some reports of 2003, it appeared that Reliance Industries had prior knowledge about the connectivity, while also not bringing it to the notice of the regulator.

At the same time, it added, ONGC, it seemed, also had some understanding but did not act promptly, and took up the matter six years after it first obtained the relevant information.

"On the question of unjust enrichment, the committee concludes that the Government of India, and not ONGC, is entitled to claim restitution from Reliance Industries for the unjust benefit it received and unfairly retained," the report uploaded on the Petroleum Ministry's Web site said.

"ONGC has no locus standi to bring a tortious claim against Reliance Industries for trespass/conversion, since it does not have any ownership rights or possessory interest in the natural gas."

Soon after the report was handed over, Petroleum Minister Dharmendra Pradhan said his ministry would take "appropriate action" in the matter by end-September.

"The report has confirmed gas migration from ONGC's block to Reliance Industries' block. We will now study the report in detail and then take appropriate action before September 30," Pradhan told reporters here. "We need more time to study the report."

Justice Shah said it was now up to the government to act. "I have submitted a comprehensive report, which covers all the terms of reference and also suggests a future course of action," said Justice Shah, a former judge of the Delhi High Court.

The government had constituted the single-member committee last December under Law Commission Chairman Shah to recommend compensation to ONGC to protect the government interest, following some reports from American consultants on migrating of gas.

The committee was asked to submit by its report by July 31 and subsequently extended the tenure by three months.

The American consultants had concluded that 11.122 billion cubic meters of ONGC gas had migrated to the blocks of Reliance Industries. They said of the 58.68 billion cubic meters produced since 2009, some 49.69 billion cubic meters belonged to the private company and 8.981 billion cubic meters could have come from ONGC's side.

At the current gas price of $4.2 per million British thermal unit, the volume of gas belonging to ONGC which the private player has produced is worth around $1.7 billion (Rs 11,055 crore).

The committee also made several generic statements:

- The Directorate General of Hydrocarbons must become more proactive in exercising its regulatory authority.

- This must encompass better vigilance, more incisive technical skills, and stronger enforcement powers.

- This is particularly necessary in a sensitive and vital sector like petroleum.

- The role of ONGC in the Indian oil and natural gas sector must be assessed with great scrutiny.

- A mechanism is required to amicably resolve disputes among parties, as and when they arise.

- This will allow smoother functioning of the energy sector, and ultimately serve the nation's interests.

- The way the oil ministry handles the matter can chart the future course of India's energy industry.