Latest news with #RIL-led
&w=3840&q=100)
Business Standard
20-05-2025
- Business
- Business Standard
RIL moves SC against HC ruling in $1.5 bn gas dispute with Centre
Reliance Industries Limited (RIL) has moved the Supreme Court, challenging the Delhi high court (HC) order which upheld the Centre's claim that the Mukesh Ambani-led company and its consortium partners had siphoned gas from deposits of ONGC block in the Krishna-Godavari (KG) Basin, off the coast of Andhra Pradesh. RIL's allocated gas block was next to the one being operated by ONGC. Sources said RIL has, in its plea, contended that the division bench of the Delhi HC should not have gone into the merits of the case since the matter had been heard and decided by a three-member tribunal headed by Singapore-based arbitrator Lawrence Boo. RIL has also pleaded that the order passed by the international tribunal was binding on the parties under the terms of the production-sharing contract (PSC). In arbitration disputes, courts generally do not delve into the merits of the case and their role is to ensure the existence of an arbitration agreement, and that the arbitration process itself was conducted fairly and lawfully, a senior advocate said. RIL has also said in its plea that the Delhi HC division bench order had mixed up the relief granted under Section 34 and Section 37 of the Arbitration Act, sources said. Section 34 of the Arbitration and Conciliation Act, 1996, in India, deals with the setting aside of an arbitral award. Section 37 of the Act outlines the scope of appeals against orders of the arbitral tribunal or the court in an arbitration proceeding. The division bench of the Delhi HC had earlier this year overturned a single-judge bench order of 2023 upholding the ruling of the arbitration tribunal in RIL's favour in 2018. The tribunal had rejected the government's contention and said that the PSC doesn't prohibit the contractor from producing gas, irrespective of its source, as long as the producing wells were located inside the contract area. In its ruling, the division bench of Justices Rekha Palli and Saurabh Banerjee had also said that the arbitration award of July 24, 2018, in favour of the RIL-led consortium, was 'contrary to public policy'. The consortium includes UK-based BP Plc and Niko Resources of Canada. BP and Niko have filed separate but related pleas contesting the findings of the Delhi HC. The Dispute In April 2000, the RIL-led consortium entered into a PSC with the Centre for the exploration and extraction of natural gas from the KG Basin. But in 2013, state-owned ONGC shot off a letter to the Directorate General of Hydrocarbons (DGH), claiming that gas pools in the RIL and adjoining ONGC blocks were connected and that RIL has been siphoning huge amounts of gas from its block. The Ministry of Petroleum and Natural Gas (MoPNG) accused RIL and its partners of an 'unjust enrichment of over $1.729 billion' by siphoning gas from deposits they had no right to exploit. It was then that ONGC filed a writ petition in the Delhi HC in which the petroleum ministry, DGH and RIL were made parties. The petition was disposed of by the court, which directed MoPNG to consider the upcoming report by the expert agency by the name of DeGolyer & MacNaughton (D&M) — a petroleum consulting company based in Dallas, Texas. The agency was to undertake an independent third-party study to verify the claimed continuity and migration of gas from the ONGC block to the Reliance block. On November 19, 2015, D&M said that 'the integrated analyses indicated connectivity and continuity of the reservoirs across the blocks operated by ONGC and RIL', validating the central government and ONGC's stand. The MoPNG also appointed a one-man committee of former Chief Justice of Delhi HC Justice A P Shah on December 15, 2015, to consider the D&M report and recommend a future course of action in light of the findings contained in the report. Based upon the Shah Committee report, the MoPNG raised a demand for $1.5 billion and $174 million in interest from RIL for 'unjust enrichment' made by the company. Reliance then approached the three-member tribunal headed by Singapore-based arbitrator Lawrence Boo. The tribunal rejected the government's contention and said that the PSC doesn't prohibit the contractor from producing gas, irrespective of its source, as long as the producing wells were located inside the contract area. The government then approached the Delhi HC against this order. When the single-judge bench of the HC ruled in favour of RIL, the Centre appealed before the division bench. The government had contended that RIL was guilty of fraud and unjust enrichment totalling over $1.5 billion. 'It is contended that the migrated gas alone was valued at about $1.5 billion as of June 30, 2016,' the Centre had then told the Delhi HC. It had further argued that though RIL had claimed there was no connectivity between their block and the government's, they had consciously siphoned gas from the ONGC block without the government's knowledge. The Centre also argued that the arbitral award it challenged was 'against India's public policy'. The division bench sided with the central government and set aside the arbitral award after which RIL approached the Supreme Court.
&w=3840&q=100)
Business Standard
20-05-2025
- Business
- Business Standard
RIL, BP, Niko move SC to restore ₹12,800 cr gas arbitration award
Reliance Industries Limited (RIL), along with its partners British Petroleum (BP) and Niko, has approached the Supreme Court to challenge a Delhi High Court order that cancelled an arbitration award worth ₹12,800 crore in their favour. According to Bar and Bench, the petitions were filed on May 14, with RIL submitting the main plea and BP and Niko filing separate but related ones. What is the case about? The dispute stems from a gas migration issue in the Krishna-Godavari (KG) Basin. In 2013, the Oil and Natural Gas Corporation (ONGC) alleged that gas from its block had migrated into the RIL-led block and was being commercially exploited without authorisation. A 2015 government-commissioned study confirmed connectivity between the fields, following which the government demanded nearly $1.55 billion (around ₹12,800 crore) from RIL. RIL denied the claim, stating that there were no contractual restrictions against utilising the gas, and initiated arbitration. The arbitration tribunal largely ruled in RIL's favour, though one member issued a dissenting opinion. A single-judge bench upheld the award, but in February 2024, a Division Bench of the Delhi High Court overturned it. Why Delhi High Court cancelled the award The Division Bench declared the award 'patently illegal' and contrary to public policy. It also ruled that the arbitration was domestic in nature, not international, since RIL — the lead party — is an Indian company. 'In our considered opinion, since the lead member, like RIL in the present case, in an arbitration proceeding is an Indian entity, the arbitration has to be treated as a domestic arbitration and not an International Commercial Arbitration,' the court said. The court listed four key grounds for cancelling the award: Patent illegality: RIL allegedly failed to disclose a 2003 report on gas movement, breaching its contractual obligations. Domestic arbitration: The case didn't qualify as an international commercial arbitration. Violation of public policy: The gas, a natural resource, is held in trust by the state and cannot be commercially used without explicit approval. Unjust enrichment: RIL and its partners were seen to have profited from gas that belonged to ONGC or the government.
Yahoo
17-02-2025
- Business
- Yahoo
Delhi HC rules against Reliance Industries in $1.7bn gas dispute case
The Delhi High Court has ruled in favour of the government in a gas dispute case, ordering Reliance Industries (RIL) to pay $1.7bn (Rs147.63bn) over allegations of "unjust enrichment'. The court found that RIL extracted gas from state-run Oil and Natural Gas Corporation's (ONGC) adjacent blocks near its KG-D6 field off the coast of Andhra Pradesh state in India. The division bench comprising Justices Rekha Palli and Saurabh Banerjee overturned an arbitration tribunal's ruling and quashed Justice Anup Jairam Bhambani's verdict, which upheld the arbitral award in favour of the RIL-led consortium. The division bench said: 'We are setting aside the impugned order dated 9 May 2023 passed by the learned single judge, and the arbitral award passed by the learned arbitral tribunal dated 2018, being contrary to the settled position of law along the pending applications, if any, leaving the parties to bear their own costs.' The case dates back to 2013, when ONGC asserted that its IG and KG-DWN-98/2 blocks, located next to RIL's KG-D6 field, shared a common gas pool. ONGC moved the court, alleging that RIL, which had already begun operations at KG-D6, was extracting gas that had migrated from its blocks. The government claimed nearly $1.6bn in costs, including interest, and $175m in additional 'profit petroleum' for the "disgorgement of unjust enrichment" by RIL until 31 March 2016. However, an arbitration panel, headed by Lawrence Woo, rejected these claims. Despite the arbitration panel's rejection of the government's charges and ordering the Centre to compensate RIL's legal expenses, the ministry persisted with its claim and approached the Delhi High Court. An independent study by US consultant DeGolyer & MacNaughton, ordered by the court, confirmed the continuity of the gas pool. Following this, a committee headed by retired Delhi HC Chief Justice A P Shah recommended that RIL should pay for the "unfair" enrichment. The tribunal had previously stated: "RIL extracted whatever gas became available in the course of petroleum operations within their contract area. Reliance deducted the 'cost petroleum', calculated the 'profit petroleum' and shared the requisite portion of the profit petroleum with the ministry. "The Ministry has not alleged that Reliance did not pay them their share of profit petroleum for the entire quantity of gas extracted by Reliance, including migrated gas." "Delhi HC rules against Reliance Industries in $1.7bn gas dispute case" was originally created and published by Offshore Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
