When public sector giant ONGC accused Mukesh Ambani’s Reliance Industries Ltd of “stealing its gas” it made for interesting headlines. But, as the war got fiercer, with an American consultant report proving that gas had flowed from ONGC’s block in the Krishna Godavari Basin to RIL’s adjacent producing asset, it also exposed the weakness in the country’s exploration and production policy. Questions emerged. How do we deal with the issue of reservoir continuity? Do we adopt the international practice or have a country-specific structure? Do we have the technical capability to examine the claims? Should there be a timeline for contractors to make such claims? How to decide on the commerciality of the produce, and so on.

These are issues that Dharmendra Pradhan, minister of state (independent charge) for petroleum & natural gas, and his team will have to address, even though they have played safe by constituting a single-member committee comprising Ajit Prakash Shah, former Chief Justice of Delhi High Court, to look into and report on the dispute by August 31.

The committee has been asked to look into the issue of gas migration and may touch upon commercial viability. But what ONGC wants is its share of financial benefits made by RIL and partners till now. According to DeGolyer and MacNaughton which inquired into ONGC’s charges, almost 15 per cent of ONGC gas could have been pumped out by RIL and partners over the years. This leads to another set of questions: How to decide the commerciality aspect? Which gas price will be taken into account — the prevailing one that is much lower or the price when RIL’s production started? Should RIL and partners be penalised for being the first mover and starting to produce from their field? Though reservoir continuity is not a new phenomenon, it’s the first such instance in India. Pradhan sure has some issues to address as his team works towards a new contract regime.

Richa Mishra Chief of Bureau, New Delhi

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