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D&M report pegs ONGC gas leak to KG-D6 at Rs 11k cr
Posted on 2nd December 2015
International oil and gas consultant DeGolyer & MacNaughton (D&M) on Tuesday gave its final report on the dispute between Oil and Natural Gas Corporation (ONGC) and Reliance Industries (RIL), establishing natural gas — believed to be worth Rs 11,000 crore — has migrated from idling Krishna-Godavari fields of the state-owned firm to the adjoining KG-D6 block.

The US-based consultant had in October given its interim report to the Directorate General of Hydrocarbons (DGH). The upstream regulator had then invited comments from the two companies on the findings.

D&M has stated 11.122 bcm of natural gas could have flown from ONGC’s Godavari-PML and KG-DWN-98/2 (KG-D5) blocks to D1 and D3 fields in RIL’s KG-DWN-98/3 (KG-D6) block. Of the 58.68 bcm of gas produced from KG-D6 since April 2009, 8.9 bcm could have migrated from ONGC’s side, it said.

“The consultant has not delved into the aspect of financial value of the gas migration,” said a source, who did not wish to be identified. However, the volume of gas belonging to ONGC works out to around $1.7 billion (Rs 11,305 crore at the current exchange rate) at a gas price of $4.2 per million British thermal units.

The government is now expected to examine the report and decide on compensation to ONGC. The government will have to act on the report by June 2016.

An RIL spokesperson said the company was studying the report. The firm had earlier stated it had scrupulously followed every aspect of the production-sharing contract and had confined its petroleum operations within the boundaries of its KG-D6 block. An ONGC spokesperson refused to comment. An official spokesperson of the petroleum ministry denied knowledge of the report.

According to D&M, 11.8 bcm of gas would have migrated from the ONGC’s blocks to RIL’s side by January 2017, and this volume would rise to 12.7 bcm by 2019. It has also said Godavari-PML had 14.2 bcm, while KG-D5 had 11.8 bcm of gross reserves.

ONGC had asked, in an appeal last year to the Delhi High Court, for compensation in case reservoir continuity was established. It contended RIL had deliberately drilled wells close to the block boundary.

However, the production-sharing contract provides for joint development in case the adjoining reservoirs are found to be contiguous. The court had last month disposed of ONGC’s plea by asking it to wait for six months for the government to act after the consultant's report was given.

Related Companies: Oil and Natural Gas Corporation Limited (ONGC)   

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