New Delhi: A three-member arbitration panel has started hearing validity of the government’s demand of USD 1.55 billion as compensation from Reliance Industries for “unfairly” producing ONGC’s gas.
The panel, headed by Singapore-based arbitrator Prof Lawrence Boo, had its first hearing on March 3, where the timetable was drawn, sources privy to the development said.
RIL will first file its statement of claim, followed by a statement of defence by the government. This will be followed by rejoinders, counter-rejoinders and oral hearing, sources said, adding that the panel plans to wind up the hearing in a year. The central government has named former Supreme Court judge G S Singhvi as its nominee on the three-member arbitration panel while RIL and its partners BP Plc of the UK and Canada’s Niko Resources have named former UK High Court Judge Bernard Eder to the panel. RIL-BP-Niko had slapped an arbitration notice on November 11 last year.
This was against the oil ministry’s November 3, 2016 notice to RIL, Niko and UK’s BP seeking USD 1.47 billion for producing about 338.332 million British thermal units of gas in the seven years ended March 31, 2016 that had seeped or migrated from the Oil and Natural Gas Corporation’s (ONGC) blocks into their adjoining KG-D6 in the Bay of Bengal. After deducting $ 71.71 million royalty paid on the gas produced and adding an interest at the rate of Libor plus 2 per cent, totalling $ 149.86 million, a total demand of 4 1.55 billion was made on RIL, BP and Niko.
RIL is the operator of the KG-D6 block with 60 per cent interest while BP holds 30 per cent. The remaining 10 per cent is with Niko Resources.
The government’s compensation claim flowed from the report of the Justice (retd) A P Shah Committee.
