Dharmendra Pradhan says, Will move court against Reliance arbitration award

Dharmendra Pradhan

India will appeal against a ruling by an international tribunal in favour of Reliance Industries (RIL) in a dispute over gas migration from fields operated by state-run explorer Oil and Natural Gas Corp (ONGC), Union Petroleum Minister Dharmendra Pradhan said on Friday.

Last week, a three-member international arbitration tribunal rejected the government's $1.55 billion claim against RIL and held that the company could contractually produce and sell any gas that might have migrated from adjoining fields of ONGC into its area and Reliance was not obligated to seek prior government permission for doing so.

"The government will certainly file an appeal against the arbitration award in the higher forum. It will be in the high court," Pradhan told reporters on the sidelines of an event organised by industry body CII.

By a majority vote last week, the arbitration panel held that the production sharing contract for the eastern offshore KG-D6 fields "does not prohibit but permits" RIL "to produce and sell gas which migrated into the sub-sea reservoir lying within (its) Contract Area from a source outside the Contract Area".

He said the government had made a claim on Reliance and its partners based on the recommendation of the Justice A.P. Shah Committee that quantified the natural gas that had migrated to KG-D6 from neighbouring blocks of ONGC.

The tribunal also awarded $8.3 million as compensation to the three partners in the operator consortium of the KG-D6 block, where RIL has 60 per cent interest, British major BP holds 30 per cent and Niko Resources of Canada the remaining 10 per cent.

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