RIL, others refute govt's claim on KG Basin

New Delhi: Reliance Industries Ltd (RIL) on Thursday strongly refuted in the Supreme Court the Centre's claim that the company and its two offshore partner firms allegedly siphoned from the Krishna-Godavari basin deposits gas which migrated to their area from the state-owned ONGC gas field.A bench of Chief Justice Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi was hearing the appeals of RIL, BP Exploration (Alpha) Ltd and Niko (NECO) Ltd against a Delhi High Court verdict that set aside an arbitral award in their favour in the gas migration dispute with the Centre.The firms assailed the February 14, 2025 order of the high court setting aside an order of the single-judge bench that had upheld the arbitral award in favour of RIL and its two partners for allegedly siphoning gas from deposits they had no right to exploit.The oil ministry on November 4, 2016, slapped a demand of USD 1.47 billion on the 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.Senior advocate Abhishek Singhvi, appearing for RIL, said it was alleged that the firms "unjustly" extracted or rather "stolen" the gas which migrated to their area from the ONGC gas field."The gas migrated may be because of pressure difference between two places," the senior lawyer said, asking how they can be accused of stealing gas when ONGC was sleeping over for many years and did not extract from its area."The ONGC (Oil and Natural Gas Corporation) was sleeping over for 10 years while operationalising the gas extraction," Singhvi said, and asked as to how the RIL and partners can be accused of causing migration of gas.The bench said the point was well taken as gas migration cannot be caused intentionally and it could be incidental.The senior lawyer said that even if it is assumed that RIL and others took away the ONGC gas, then how it can be quantified.Senior advocate Kapil Sibal, appearing for one of the foreign firms, echoed the same arguments and said if the situation is reversed and "let us assume that ONGC had operationalised the gas extraction and RIL and others did not...then, can the government act the way it did and ask ONGC to compensate us".He also said that the "whole allegation of gas theft was very wrong".Sibal said the government had allowed 100 per cent FDI in certain fields to spur economic growth and such an approach would "slow down the economic growth".He said that the confidence of foreign investors that arbitral awards will not be interfered with so easily should be maintained.Singhvi assailed the Delhi High Court division bench judgment setting aside an arbitral award in RIL's favour and said it impermissibly imported constitutional doctrines into a contractual arbitration dispute.He said the high court wrongly invoked Article 297 of the Constitution and the public trust doctrine to overturn concurrent findings of the arbitral tribunal and the single judge, despite neither principle prohibiting the extraction of migrated gas under the production sharing contract (PSC).He said the Centre's policy framework itself was designed to maximise exploitation of natural resources without public investment, with the contractor bearing both capital risk and operational cost."The policy is a very good policy of the Government of India to exploit our natural resources to the full without investing money and risk. Risk is mine, money is mine," he said.He said that while ownership of offshore natural resources under Article 297 indisputably vests in the Union, the constitutional provision could not be used abstractly to invalidate contractual arrangements made under that very framework.Defending the arbitral award, he said the tribunal had correctly held that the PSC permitted extraction of gas that had naturally migrated into Reliance's contract area, as the contractor was operating strictly within its licensed geographical limits and had not undertaken any deliberate extraction from ONGC's adjoining block.Using the analogy of fugitive minerals, he said that natural gas, unlike static minerals such as coal, migrates due to pressure differences and does not respect artificial contractual boundaries.The hearing will resume on Friday.On Wednesday, the bench declined a submission by RIL to put the hearing in the case on hold for the time being as the company and two other foreign firms sought mediation or conciliation with the Centre for an amicable resolution.In July 2018, an international arbitration tribunal rejected the Centre's claim of USD 1.55 billion against RIL and its partners for allegedly siphoning gas from deposits they had no right to exploit. The three-member arbitral panel by a majority of 2-1 had also awarded USD 8.3 million compensation to the three partners, Reliance had said in a regulatory filing.Earlier, a division bench of the high court had allowed the appeal of the central government challenging the May 9, 2023 judgment of a single judge that was passed in favour of the Mukesh Ambani-promoted RIL.The single judge, while upholding the arbitral award, had said the court was not persuaded to hold that the conclusions drawn by the arbitral tribunal were such that no reasonable person would reach.

from Economic Times https://ift.tt/iCvP5lT