Thursday, 8 September 2016

Great Indian Gas Robbery by Reliance

  • ONGC and RIL were allocated, by MoPNG, adjacent blocks for development of undersea wells off K-G basin in 2000.
  • Since the blocks were adjacent to each other and contiguous oil and gas fields or reservoirs, under the provisions of the PSC, they should have been jointly developed by the two companies. 
  • Four wells have been drilled by RIL within distances ranging within 50m to about 350m from the blocks of ONGC and wells have been so drilled and constructed that there is a pre-planned and calculated slant/angular incline towards the gas reserves of (the) petitioner with a clear idea to tap the same. Production of gas from the KG-D6 block by RIL started in April 2009.
  • ONGC contended that RIL might have drawn natural gas worth up to Rs 30,000 crore from its fields adjacent to the Relaince's fields.
  • After months of legal wrangling ONGC and RIL, agreed on an independent consulting firm based in the US which would give its technical findings in the dispute. This consultant, DeGolyer and MacNaughton (D&M) based out of Dallas, Texas, in the US, submitted an interim report on Oct 9, 2015 which stated that natural gas worth $1.7 billion or over Rs 11,000 crore had been extracted by RIL in an unauthorised manner from an area on the ocean bed where gas extraction was supposed to be controlled by ONGC. 
  • What is worse is that the Ministry of Petroleum and Natural Gas (MoPNG) in the Government of India has been complicit in the alleged theft by Reliance for its conscious and systematical pilferage of Gas.
  • An estimated 11.89 bcm of gas from ONGC blocks would have “migrated” to Reliance blocks by Jan 1, 2017 and this volume would go up to 12.71 bcm by May 1, 2019 and after such a high volume of “migration” of gas, it would no longer be economically viable for ONGC to develop the particular undersea fields. ONGC could seek over Rs 25,000 crore by way of compensation. 
  • RIL said that all its operations had been undertaken in accordance with the PSC and the development plan approved by the management committee which had government representatives holding veto powers. It added that all well locations and their profiles had been specifically reviewed and approved by the committee.
  • ONGC’s decision to move court surprised so many despite being under pressure. The minister of petroleum and natural gas in the UPA government, Veerappa Moily shot off a note to the Secretary in the MoPNG, Saurabh Chandra, calling for an enquiry as to why ONGC had dared to initiate legal action against its biggest shareholder i.e. MoPNG owning 70% of ONGC shares. 

My View:
Crony capitalists, like Mukesh Ambani,  armed with huge amounts of money are like vultures always waiting for any sector to open up and with connivance of politicians in power and bureaucrats holding positions blatantly exploit loopholes which were consciously retained in the system to benefit them. Reliance, the largest corporate conglomerate has benefited from the way government policies are structured, it lays bare the alarming facts of a natural disaster waiting to happen due to the ruthless exploitation of the country. Needless to say management and enforcement of contracts are crucial to good governance in any sector. In the case of alleged gas robbery by Reliance, the management committee, which included representatives of the ministry, apparently acquiesced in whatever RIL did, and the contractual provisions for joint-management of the gas fields and imposition of penalties were never invoked. This does not augur well for a country that is aggressive inviting foreign investments. In the absence of political will and administrative honesty we as a nation makes one steps forward and these vultures pulls us several steps backward. In the absence of matured systems, aggressive privatization leads us to disaster and impoverish the nation while enriching ruthless corporates and businesses. 

Reliance with its attitude is dangerous to the society and must be disarmed and wound up and debarred for conducting any business. Its wealth and creating jobs and contribution to the economy is no justification for tolerating its unjust & unlawful activities. In fact, the larger the company the more is their responsibility towards law compliance and social order.

Despite common consultant's report confirming gas robbery and ONGC independent directors forcing filing of case against Reliance (A1) and Ministry of petroleum (A2) 70% owner of ONGC equity, three years ago Modi government not taking any precise action against Mukhesh Ambani's Reliance speaks volumes about his neat & clean administration.

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