RIL fires fresh salvo at ONGC, denies gas theft allegation

Reliance Industries on Friday hit out at Oil and Natural Gas Corp (ONGC) for suing it over KG gas dispute, saying some elements in the state-owned firm may be "misleading" the chairman D K Sarraf to hide their failure in developing the discoveries made over 13 years.

ONGC had on May 15 moved the Delhi High Court alleging that RIL may have drawn natural gas worth thousands of crores of rupees from its fields that sit next to Mukesh Ambani-run firm's KG-D6 block Krishna Godavari basin.

"We deny the claim of apparent 'theft' of gas from (ONGC's) G4 and KG-DWN-98/2 Block by RIL and can only attribute it to the likelihood of some elements in ONGC misleading the new Chairman and Managing Director, Sarraf, in order to hide their own failure to develop discoveries made over the last 13 years in these blocks," RIL said in a statement.

RIL statement did not name the "elements" within ONGC who are misleading Sarraf. Sarraf had on May 20 stated that ONGC had sued RIL to protest its commercial interest.

ONGC believes that RIL's D6-A5, D6-A9 and D6-A13 wells drilled close to the block boundary may be draining gas from its G-4 field of Godavari block while the well D6-B8 may be draining gas from DWN-D-1 field of its KG-DWN-98/2 block.

RIL said it has since August 2013, when ONGC approached it over the issue, been engaged with ONGC in the process of appointing an independent agency to investigate possible reservoir connectivity across the blocks.

"The two had met on May 9, 2014 and exchanged drafts regarding the scope of work to be assigned to such agency," the statement said adding the two sides met again today and finalised an enquiry note to be sent to four agreed global expert agencies.

It was decided to issue the Enquiry Notice on May 26. "Since the process for appointing this agency as per international practice was already well underway it is indeed unfortunate that some elements in ONGC forced invocation of the Delhi High Court at this juncture.

"Resolution of such complex techno-commercial matters, that are not un-common in the oil and gas industry, is best done through the help of experts rather than public posturing.

In any case, ONGC already having already filed a petition in the Hon'ble Delhi High Court, we would have expected greater restraint in a matter that has been made sub-judice by them," RIL said.

ONGC believes its Godavari Block (known as G-4) and New Exploration Licensing Policy (NELP-1) discovery block KG-DWN-98/2 are contiguous to RIL-operated NELP-1 Block KG-DWN-98/3 (KG-D6).

"As per our data, some of the resources is common to our block and RIL. There is apprehension that some of wells (of RIL) on the boundary of the block may be drawing gas from our fields," Sarraf had said on May 20.

RIL said ONGC approached it in mid-2012, to examine the possibility of sharing its KG-D6 infrastructure in order to commercialise some of the discoveries in KG blocks and an MoU was signed in July 2013.

"We continue to see ONGC as a valued industry peer, worthy of collaboration, to whom we will continue to provide assistance to help develop its discoveries and start production of valuable gas locked beneath the Indian Ocean to the benefit of the people of India," the statement said.

RIL said in August 2013, that ONGC raised the issue of possible connectivity between reservoirs in RIL and ONGC blocks through the Directorate General of Hydrocarbons (DGH).

"Since then, as per international practice, ONGC and RIL have been engaged in the process of appointing an independent agency to investigate the issue of possible reservoir connectivity across the blocks," it said.

The officials of the two firms had met on May 9 and exchanged drafts regarding the scope of work to be assigned to such agency.

On May 23, the parties again met and finalised the enquiry notice to be sent to four agreed international expert agencies. It was decided to issue the Enquiry Notice on May 26, 2014.

RIL said Cairn made the first discovery in KG-DWN-98/2 (KG-D5) Block in 2001. RIL's D1-D3 discoveries in KG-DWN-98/3 (KG-D6) Block occurred in October 2002.

ONGC then farmed into Cairn's KG-D5 Block and took over Operatorship in 2005. ONGC, which had been operating the G4 nomination block since 1997, made its first Pliocene discovery in this block in early 2004.

"However, while RIL had brought its D1-D3 discoveries into commercial production by April 2009 after a mere six and a half years from discovery, ONGC is yet to commence development of any of the discoveries in its two blocks," it said.

All wells drilled by RIL during the development of D1-D3 (in KG D6) are well within the block boundaries and approved in accordance with the PSC by the Management Committee consisting of Government representatives, who have the power to veto.