D6 gas: RIL may have to pay 15-20% more

Mukesh Ambani’s Reliance Industries Ltd and its partners in the East Coast gas block – KG D6 – may end up paying an additional 15-20 per cent to the government for benefits it got from the disputed gas.

Based on the recommendations and model suggested by the single-member Justice AP Shah Committee, the Directorate General of Hydrocarbons is working on the monetary compensation that RIL will have to pay for extracting natural gas that migrated from ONGC’s adjacent fields.

Senior officials in the know told BusinessLine that the compensation would be decided after deducting the royalty, cess and profit petroleum that the contractors have paid the government on the produce so far.

“We should have some numbers in place in the next week,” another official said.

“The glitch in deciding the monetary compensation for the period April 2009 to March 2015 is royalty calculations, which was 5 per cent for sometime and then become 10 per cent. It will be on the prevailing gas price — $4.2/unit (gas is measured in million British thermal units). Besides, calculations have to be done for future output and the gas price to be taken,” another official added.

Asked why compensation should be paid to the government and not to ONGC, the official said, “the mineral resource belongs to the nation. The contractor owns it only at the delivery point (where it sells to consumers). So, the compensation has to be paid to the government.”

Parallely, the Ministry for Petroleum & Natural Gas may initiate an inquiry against ONGC and other contractors for not disclosing information on gas migration though they were aware of it. The Shah Committee report indicates that ONGC knew of the development, although the PSU contests this.

Confirming the continuity of reservoirs, the Committee also quantified the amount of gas migrated from Godavari PML and D1 discovery area of ONGC’s KG-DWN-98/2 to RIL’s Block of KG D6 from April 2009 to March 2015. It also quantified the amount of gas likely to further migrate from April 2015 to March 2019. The Shah Committee said independent consultant DeGoyler & MacNaughton's report must form the basis for the migration of gas up till 2015, and that migration of gas post-2015 has to be inquired into by the government.

The D&M report found that up to 15 per cent of the gas could belong to ONGC. It calculated that from April 2009 till March 2015, about 7.009 billion cubic metre and 4.116 billion cubic metre of gas had migrated from the Godavari PML and D1 discovery of ONGC’s acreage to RIL’s block. Of this, 5.968 billion cubic metre and 3.015 billion cubic metre, respectively, were produced.

The reserves in the D-1 and D-3 fields of the Reliance-BP-Niko KG D6 block total 2.9 trillion cubic feet, of which 2.1 trillion cubic feet or more has already been extracted.

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