Government Seeks $3.8 Billion From Reliance, ONGC And Shell
The government has reiterated a demand for $3.8 billion from Reliance Industries Ltd., Shell India and Oil and Natural Gas Ltd. after an English court ruled over government’s share from the Panna-Mukta and Tapti fields in the western offshore.
In a regulatory filing, RIL said the government had on May 2017 sought $ 3.8 billion as its share from the western offshore field and has “recently repeated its demand”.
The liability is to be split between the three companies in proportion to their stake in the PMT fields. State-owned ONGC has about 40 percent interest while RIL and Shell holds 30 percent apiece.
The demand pertains to interpretation of the contract for the Panna-Mukta and Tapti oil and gas fields in the Arabian Sea. In December 2010, BG Exploration and Production India Ltd. and RIL, initiated an arbitration against the Government of India after a dispute over the state’s share of profit and royalty from Panna-Mukta and Mid and South Tapti contract areas off the west coast.
"The Arbitration Tribunal determined a number of disputes in a final partial award on October 12, 2016, which was accompanied by two dissenting opinions," RIL said in the filing. BG, which was subsequently acquired by Shell, along with RIL initiated proceedings under English Arbitration Act 1996 to challenge the arbitration award before the English Commercial Court in November 2016.
On May 2, 2018, the Court delivered its final judgement, remitting a significant issue for re-determination by the Tribunal within three months, RIL said without giving details. The Arbitration Tribunal has scheduled a hearing to determine the remitted issue and will thereafter deliver an award, it added.
On May 25, 2017, GoI, in disregard to the arbitration proceedings and pending English court proceeding, claimed - $3.8 billion from the contractor consortium of BG, ONGC and RIL (RIL share being $1.15 billion). This amount was calculated by GOI on its own purported interpretation of the arbitration award.Reliance Industries Filing
It insisted that before taking up the issue of quantification of liability, the Tribunal has to decide the issue which is remitted by the English court to it. BG-RIL also propose to file an application to the Tribunal for increase of Cost Recovery Limit which they are entitled to do under the Production Sharing Contracts.
“Tribunal can consider the issue of quantification of liability (if any) only after these two issues are decided,” RIL said. “Several issues relating to the claim made by GOI are subject to pending arbitration proceedings.”