The Hindu Business Line : ONGC seeks Govt nod to serve notice on GAIL

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New Delhi Feb. 10 Public sector giant Oil and Natural Gas Corporation (ONGC) has sought permission from the Government to serve an arbitration notice on a sister public sector concern GAIL (India) Ltd on the issue of gas sales from the Panna-Mukta-Tapti (PMT) fields.

ONGC's two other joint venture partners for this field — Reliance Industries Ltd and British Gas — have already served notice on GAIL and the amount involved is close to $150 million.

To join its joint venture partners in serving notice on GAIL, ONGC has approached the Committee on Disputes, the official body which deals with differences between public sector undertakings.

ONGC's joint venture partners in the PMT fields are seeking payment from GAIL for supply of gas from the fields for half of the year ended March 2005.

ONGC, which is the 40 per cent stakeholder in the joint venture (with the balance being held equally by Reliance and BG), needs the approval before serving notice to another state-owned company.

Sources told Business Line that ONGC has also expressed the view that it should not be left out if any decisions are taken on the issue.

The joint venture partners are seeking the difference between the price arrived at as per the Production Sharing Contract (PSC) and the earlier price paid by GAIL during June 2004 for Tapti and February-March 2005 for Panna, Mukta fields.

In November 2004, the Government allowed the joint venture partners to sell gas directly to customers. The partners revised the price of gas to $5.6 per mmBtu and wanted to sell directly to other customers, bypassing GAIL. However, on Government's intervention, the partners sold their entire produce of about 11 mmscmd (million metric standard cubic metres per day) to GAIL at $3.11 per (million metric British thermal unit) mmBtu until March 2005, a price fixed by the Government.

GAIL increased payments to $3.86 from April 2005 to March 2006 for 6 mmscmd.

The price was again revised to $4.75 per mmBtu for 5 mmscmd from April 2006 until March 2008. However, the dispute remains on payments for the period June 2004 and February-March 2005.

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