International arbitration tribunal rejects Indian government’s claim of USD 1.55 billion against Reliance Industries

NEW DELHI: An international arbitration tribunal has rejected Indian government’s claim of USD 1.55 billion against Reliance Industries and its partners – BP plc of UK and Canada’s Niko Resources — for allegedly syphoning gas from deposits they had no right to exploit.

The 3-member panel, by a majority of 2-1, also awarded USD 8.3 million compensation to the three partners, Reliance has said in a regulatory filing. All the contentions have been upheld by the majority, with a finding that the consortium was entitled to produce gas from its contract area. Under the direction of the Delhi High Court, the government had appointed a one-man committee under retired Justice A P Shah to go into the issue. Shah, however, said the compensation should go to the government as it is the owner of all unproduced natural resources.

The oil ministry on November 4, 2016, slapped a demand of USD 1.47 billion on Reliance-BP-Niko combine for producing in seven years ending March 31, 2016, about 338.332 million British thermal units of gas that had seeped or migrated from ONGC’s blocks into their adjoining KG-D6 in the Bay of Bengal. Reliance 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. Originally, ONGC had sued Reliance for producing gas that had migrated from its blocks KG-DWN-98/2 (KG-D5) and Godavari PML in the KG basin to adjoining KG-D6 block of Reliance.

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