Lok Sabha Question No. 2279 (UNSTARRED), answered on 2018-12-24
Subject: Penalty on RIL
Ministry: PETROLEUM AND NATURAL GAS
Asked by: DARSHANA VIKRAM JARDOSH, PONGULETI SRINIVASA REDDY, LAXMAN GILUWA, HARISHCHANDRA DEORAM CHAVAN, JANARDAN SINGH SIGRIWAL

## LOK SABHA

## UNSTARRED QUESTION NO. 2279

## TO BE ANSWERED ON 24 th  December, 2018

## Penalty on RIL

2279.  SHRIMATI DARSHANA VIKRAM JARDOSH:

SHRI PONGULETI SRINIVASA REDDY:

SHRI LAXMAN GILUWA:

SHRI HARISHCHANDRA CHAVAN:

SHRI JANARDAN SINGH SIGRIWAL::

Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:

- (a) whether  the  Government  has  imposed  an  additional  penalty  of  $380  million  on Reliance Industries Limited (RIL) and its partners for producing less than targeted natural gas  from  eastern  offshore  Krishna  Godavari  (KG)  D6  basin,  if  so,  the  details  thereof along with the details of the total penalty imposed on RIL in this regard;
- (b) whether a dispute has been created by the gas supply contractors of KG basin over  the  cost  issued  by  the  Government  and  if  so,  the  details  thereof  along  with  the action  taken  by  the  Government  to  compensate  the  revenue  loss  suffered  to  the exchequer;
- (c) the updated status of the probe conducted by the Government in respect of theft of gas in the KG basin along with the action taken/being taken after the submission of inquiry report to the Government;
- (d) the  estimated  loss  of  revenue  to  the  Government  due  to  theft  of  gas  from  KG basin along with the steps taken to recover such loss; and
- (e) whether  the  Government  has  received  any  complaint  from  ONGC  regarding drawing gas from its reservoir by a private company and if so, the details thereof along with the action taken by the Government in this regard?

## ANSWER

पेट्रोलियम एवं प्राक ृ लिक गैस मंत्री ( धमेन्द्र प्रधान ) MINISTER OF PETROLEUM& NATURAL GAS (SHRI DHARMENDRA PRADHAN)

- (a) & (b): Contractors  of  Block  KG-DWN-  98/3  in  violation  of  Article  15  of  PSC claimed cost recovery beyond the entitlement out of cost petroleum due to creation of excess capacity and failure to adhere to the drilling schedule approved under Addendum to Initial Development Plan (AIDP), resulting in under-utilisation of assets / facilities.  The Government vide notice dated 03.06.2016 disallowed cumulative cost recovery of US $ 2.756  billion  and  demanded  additional  profit  petroleum  of  US  $  246.9  million  upto  FY 2014-15.  Upto Financial year 2013-14, cumulative contract cost of US $ 2.376 billion was disallowed for cost recovery purpose. For Financial year 2014-15, the cost recovery of  US  $  380 million  was  disallowed.  The  contractors  invoked arbitration.   Till  February

2016, Rs. 491.26 crores has been credited in Gas Pool account against the additional profit petroleum due and payable by contractors.

(c) to (e): In  2013-14,  ONGC  informed  DGH  about  evidence  of  lateral  continuity  of gas  pools  between  ONGC  blocks  and  adjacent  block.    The  discussion  was  held  with DGH to appoint a third  party  independent  expert  for  studying  and  verifying  the  same. ONGC also filed a Writ Petition No.3054 of 2014 before Delhi High Court for appointment of  independent  agency  to  establish  continuity  of  reservoirs  across  the  two  blocks  of ONGC  and  adjacent block. An independent third party expert DeGolyer and MacNaughton (D&M) was appointed to go in the issue of migration and production of gas from  ONGC  to  adjacent  block.  Government  constituted  a  single  member  committee comprising  of  Shri  Ajit  Prakash  Shah,  former  Chief  Justice  of  Delhi  High  Court  to consider  the  report  submitted  by  D&M  and  recommend  the  action  to  be  taken  by Government.  The Committee had in its Report, inter-alia, concluded that there has been unjust enrichment to the contractor of the block KG-DWN-98/3 due to production of the migrated gas from ONGC's blocks KG-DWN-98/2 and Godavari PML.   The Government has accepted the recommendations of the Committee and consequently, issued a notice on 03.11.2016 to claim restitution from the Contractor of the block KG-DWN-98/3 for the unjust  benefit  received  and  unfairly  retained.    Government  through  this  notice  has directed the Contractor of block KG-DWN-98/3 to remit an amount of US $ 1.552 billion along  with  interest  upto  31.3.2016  towards  restitution  and  an  amount  of  US  $  174.9 million towards additional Profit Petroleum.   The Arbitral tribunal, in July 2018, passed an award in favour of the contractor.  Government has filed an application under section 34 of  the  Arbitration  and  Conciliation  (Amendment)  Act,  2015  before  Delhi  High  Court  for setting aside the award.

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