The Centre on Friday issued a penalty of $1.55 billion (approximately Rs 10,340 crore) on Reliance Industries Limited for drawing and selling natural gas from the state-owned Oil and Natural Gas Corporation's idle block in the Krishna-Godavari basin, The Indian Express reported. The government had constituted the AP Shah committee to look into the migration of natural gas from ONGC’s block to the nearby fields of Reliance Industries.
The company and its partners have been given 30 days to respond to the Oil Ministry's penalty notice, Reuters reported. The report said the private explorer's shares fell by 1.6% after the penalty was issued.
RIL is believed to have exploited the natural gas that migrated to its block from ONGC's adjoining block. The Directorate General of Hydrocarbons calculated the figure by taking into account the capital and operational expenditure RIL must have incurred while taking out the migrated gas, officials told The Financial Express. The directorate submitted its report to the Oil Ministry last week.
Up to 11.122 billion cubic metres of natural gas had migrated from ONGC's 98/2 block to RIL's adjacent KG-D6 block in the Bay of Bengal between April 1, 2009, and March 31, 2015, according to a study conducted by United States-based consultant DeGolyer and MacNaughton in November 2015.
In a report on the matter, former Delhi High Court chief justice AP Shah said RIL can be fined based on either the value of the migrated gas produced, or to be produced, or on the profit it made from the enrichment, taking into consideration its expenses and sales figures. Shah, however, had clarified that ONGC did not have the locus standi to make complicated claims against Mukesh Ambani's Reliance.
Reliance had said it had the right to recover the capital expenditure incurred for development, drilling and other facilities as well as operating costs.