BP questions Shah panel's terms of reference

BP, which holds 30% in KG-D6, says terms of reference appear to risk prejudging the outcome of Committee's recommendations

UK's BP plc has questioned the terms of reference of the Shah Committee looking into the issue of gas migration from ONGC's KG block to neighbouring fields operated by Reliance and BP, saying they appear to risk prejudging the outcome.

The government had in December set up a one-man Committee under Law Commission Chairman A P Shah to look into acts of omission and commission and recommend compensation to ONGC whose natural gas from Bay of Bengal block had flowed to adjoining Dhirubhai-1 and 3 fields of Reliance Industries.

BP, which holds 30 per cent interest in the KG-D6 block, in its comments to the Shah Committee questioned the terms of reference of the panel saying they "appear to risk prejudging the outcome of the Committee's recommendations given their heavy focus on quantification of alleged unfair enrichment and the need to provide measures to prevent alleged unfair enrichment."

The panel was constituted after US-based consultant D&M in final report stated that as much as 11.122 billion cubic meters of natural gas, worth over Rs 11,000 crore, had migrated from idling Krishna Godavari fields of Oil and Natural Gas Corp (ONGC) to adjoining KG-D6 block of RIL-BP.

"BP trusts that there is no preconceived notion of unfair enrichment being attributed to the Contractor (RIL-BP) so as to risk bias against the Contractor. BP specifically reserves it rights in relation to this characterisation," BP wrote.

The company said various conclusions of the D&M report "point that unless all the relevant data is integrated, it is not possible to conclude any connectivity (between the two blocks)."

"The D&M study provided the opportunity to integrate a larger data set combining information from both operators that was unavailable to all parties at the time key field development decisions were made. Therefore any assumption of unfair enrichment is misplaced," BP said.

In the same breath, BP said it was not involved in any discussion and has not provided any input to the study undertaken by D&M and its report.

Unlike RIL, BP had from the beginning decided to cooperate with the Shah Committee and provide inputs.

RIL had initially questioned the very constitution of the panel but this month backtracked and agreed to provide "technical inputs" but will not assist on financial part like calculation of alleged unfair enrichment by it.

BP cited examples of Egypt, Norway and Australia to say fields were jointly developed when it came to notice that reservoir in one extends into another.

According to the terms of reference, the Shah Committee has been asked to "quantify the unfair enrichment, if any, to the contractors of the adjacent block KG-DWN-98/3 (KG-D6) and measures to prevent future unfair enrichment to these contractors on account of gas migration."

It has also been asked to "recommend action to be taken to make good the loss to ONGC/Government on account of such unfair enrichment to the contractors."

DeGolyer and MacNaughton (D&M) has in its November 30 report established that reservoirs in ONGC's Krishna Godavari basin KG-DWN-98/2 (KG-D5) and the Godavari-PML are connected with Dhirubhai-1 and 3 (D1 & D3) field located in the KG-DWN-98/3 (KG-D6) Block of RIL.

It states that as much as 11.122 billion cubic meters of ONGC gas has migrated from Godavari-PML and KG-DWN-98/2 to KG-D6.