Solution to ONGC’s suit against RIL could lie outside courts

May 19 2014, 04:26 IST
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ONGC and RIL have jointly signed minutes of a meeting to record such an understanding, said the Mukesh Ambani-controlled explorer. ONGC and RIL have jointly signed minutes of a meeting to record such an understanding, said the Mukesh Ambani-controlled explorer.
SummaryONGC and RIL have jointly signed minutes of a meeting to record such an understanding, said the Mukesh Ambani-controlled explorer.

ONGC last week took Reliance Industries to court for allegedly taking away gas from its blocks overlapping with the latter’s KG-D6 block, but globally there are enough precedents of such issues being settled amicably outside court rooms. The PSU’s move, pertinently, comes close on the heels of the two parties agreeing to appoint a third-party consultant to assess the extent of overlap.

Hydrocarbon blocks being continuous underground are not rare in Indian sedimentary basins, nor are they globally, and the mostly widely used tool to resolve the disputes arising from such porous fields is what is called a unitisation agreement (UA) among the parties in a potential dispute. Not only within the confines of national boundaries, even cross-border reservoir connectivity is resolved through pre-emptive UAs between the companies involved — in the latter case, also with joint ratification by the governments concerned.

Early this year, for instance, Brazil’s oil regulator ANP said that Royal Dutch Shell needs to work out a solution with the Brazilian government as it exceeded extraction at an oil reservoir and suggested that the MNC sign a UA with Brazil’s national oil company PPSA. Shell admitted to the reservoir exceeding the limit, while Brasilia said Shell’s BM-S-54 block encroached on areas yet to be auctioned.

Another recent example of a cooperative approach between the stakeholders to monetise such disputed hydrocarbon resources is the UK and Norway signing an agreement that each country would respect their boundaries in the North Sea, if oil and gas is found flowing across the dividing line.

There are several such cases in the oil-rich Gulf countries. According to industry watchers, an exploration company was producing oil from an Abu Dhabi offshore field known as Sassan, whose reservoir was spread across the international boundary between Abu Dhabi and Iran. Negotiations are on between the two nations.

In yet another such case, Qatar is reportedly developing the North Field that is expected to be connected to South Pars of Iran, across the border. If the reservoir is connected, as believed, North Field is reducing Iran’s hydrocarbon recovery. Since there is no unitisation agreement between the two countries, it is unclear whether Iran would raise the matter in international fora or negotiate with Qatar for a resolution.

Back home, in its plea before the Delhi High Court, ONGC alleged that RIL had “exploited” gas from the PSU’s blocks in the KG Basin totalling about 18 billion cubic metres (bcm) between

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