ONGC-RIL gas dispute: Who's to be blamed?

The government will now examine the report and decide on how and to what extend should ONGC be compensated for its gas being produced by RIL.

US-based consultant D&M has submitted its final report on the gas dispute between ONGC and Reliance Industries, establishing that natural gas worth over Rs 11,000 crore (Rs 110 billion) has migrated from idling KG fields of the state-owned firm to the adjoining KG-D6 block.

DeGolyer and MacNaughton (D&M) has submitted its final report to the Directorate General of Hydrocarbons (DGH), a senior government official said.

"The report more-or-less reiterates what D&M had stated in the draft report that some gas had indeed migrated from ONGC's Krishna Godavari basin blocks to RIL's KG-D6 fields", he said.

The government, he said, will now examine the report and decide on how and to what extend should ONGC be compensated for its gas being produced by RIL.

"The Supreme Court had in its order (on ONGC petition on its gas being produced by RIL) stated that government will have to in six months from the date of receipt of D&M report decide on addressing ONGC contention. That we will do", he said.

D&M, in its report, established that reservoirs in ONGC's Krishna Godavari basin KG-DWN-98/2 (KG-D5) and the Godavari Producing Mining Lease (PML) are connected with Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) Block of RIL.

It states that as much as 11.122 billion cubic meters of ONGC gas has migrated from Godavari-PML and KG-DWN-98/2 to KG-D6.

Of the 58.68 bcm of gas produced from KG-D6 block since April 1, 2009, 49.69 bcm belongs to RIL and 8.981 bcm could have come from ONGC's side, D&M said.

At gas price of $4.2 per million British thermal unit, the volume of gas belonging to ONGC which RIL has produced comes to $1.7 billion (Rs 11,055 crore).

ONGC had in 2013 claimed that RIL had deliberately drilled wells close to the common boundary of the blocks and that some gas it pumped out was from its adjoining block.

RIL, on the other hand, has maintained that it has "scrupulously followed every aspect of the production sharing contract and has confined its petroleum operations within the (boundaries of its) KG-D6 block" in Krishna Godavari basin.

D&M estimated that ONGC's Godavari-PML had 14.209 bcm of gross in-place reserves and KG-D5 another 11.856 bcm. RIL's D&D3 fields held 80.697 bcm gross in-place reserves.

Of these, 12.80 bcm of Godavari-PML, 8.01 bcm of KG-D5 and 75.33 bcm of KG-D6 are connected, it said.

It estimated that 11.89 bcm of gas from ONGC blocks would have migrated to KG-D6 by January 1, 2017. This volume would rise to 12.713 bcm by May 1, 2019.

The volume of gas remaining after this would not be economically viable for ONGC to develop.

D&M was jointly appointed by ONGC and RIL to find if the neighbouring fields are connected.