ONGC was 'under pressure' to act on RIL, admits director for exploration NK Verma

NEW DELHI: Oil and Natural Gas Corp was “under pressure” from the government to act on concerns that Reliance Industries Ltd could have pumped out gas from a reservoir that straddles adjoining blocks of the companies in the KG Basin, ONGC’s director for exploration NK Verma said.

Verma recently wrote to the oil ministry complaining that RIL was not cooperating in discussions over the reservoir. Reliance, on the other hand, accused ONGC of not sharing crucial data that can resolve the matter.

ONGC sought appointment of an independent consultant because Reliance was refusing to hold discussions, but the latter has sought a meeting on March 11. While the two firms are at loggerheads over the reservoir, both are on the same page on the matter of gas prices.

ONGC, like RIL, says many fields are unviable at the current price and some of its own fields will be commercially viable only at a price of $11 per unit, far more than what the gas will cost next month when prices double to $8.4 per unit. Verma said ONGC was concerned that RIL had drilled wells “very, very close” to ONGC’s block.

“We have exchanged data. Let the government appoint a third-party consultant to resolve the matter,” he said at a news conference called for the newly appointed chairman and managing director DK Sarraf and his board members’ first interaction with the media after he took charge on March 1.

Sarraf, who did not want his maiden press conference to be dominated by this issue, said ONGC would gain Rs 16,000 crore a year from the new gas price. Net profit would rise by Rs 9,600 crore. After paying dividend tax and other levies, ONGC’s net benefit would be Rs 5,200 crore, he said.

He said gas production from ONGC’s block that borders RIL’s KGD6 will start in 2017. Sarraf said the company had also found a good reservoir of oil apart from gas fields in the deep-sea block. Sarraf said the company would focus on adding