Reliance Industries wins arbitration award of US$8.3 million
A consortium of oil exploring companies lead by Reliance received a favourable ruling in a dispute regarding unjust production of gas near the blocks allocated to ONGC in the Krishna-Godavari Basin.
Reliance operators the KG-D6 block with 60 per cent interest, while BP and Niko Resources hold 30 and 10 per cent interest, respectively. The ruling entitles the consortia for an award of US$8.3 million (approx. Rs. 56.44 crore) from the Government of India.
Government of India claimed that Reliance gained through unfair practice by harvesting gas that migrated from ONGC's blocks KG-DWN-98/2 (KG-D5) and Godavari PML in the KG basin to adjoining with Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) block belonging to Reliance. Government demand that the company must return US$1.55 billion earned through this gas.
According to experts, the arbitration panel agreed with Reliance’s contention that the terms of the contract allow the company to produce gas from the allocated wells, regardless of the source of the gas. The government is studying the ruling and may challenge.
In 2014, ONGC had approached the Delhi High Court, alleging that Reliance was producing gas from its blocks. The court directed the government to look into the matter which appointed a panel to study the allegations. The panel concluded that ONGC's claims were justified based on the US consultant DeGolyer and MacNaughton (D&M) report.
Earlier, Reliance Industries (RIL) reported Q1FY19 PAT of Rs. 94.6 billion, up 15 per cent YoY. The company's consolidated EBITDA surged more than 50 per cent YoY driven by the performance of its petrochemical segment and continued traction from digital services.
After displacing TCS from the top market capitalization position on Tuesday, the Reliance Industries was again buzzing in Wednesday's trading session with this development. However, the markets seems to have already factored in this development as the stock of Reliance was quoting Rs. 1,191 per share, up by 0.43 per cent at 12:46 hours on Wednesday.