No pressure in oil, gas arbitrations: Government

New Delhi, May 2 (IANS) The government will not give in to pressure in resolving arbitration disputes with companies such as Reliance Industries engaged in oil and gas exploration, parliament was told on Monday.

“There is no compulsion for the government with any private company. Now, the country’s Prime Minister is Narendra Modi and the rest is assured,” Petroleum Minister Dharmendra Pradhan told the Rajya Sabha during Question Hour in Rajya Sabha in reply to a query by BJP member Bhola Singh on delays in resolving oil field disputes with private petroleum companies, including Reliance Industries Ltd (RIL).

Pradhan said the NDA government has inherited some problems from the previous UPA, which is causing the delay in resolving the disputes.

The minister said further that the government has in the recently approved gas pricing policy offered to give higher rates to undeveloped gas discoveries provided they withdraw arbitrations they have initiated.

RIL has launched four arbitrations against the government, including one seeking higher gas price for its existing fields in KG-D6 block in the eastern offshore.

Another RIL arbitration is contesting penalty imposed by the government in the form of disallowance of cost recovery, and a third for taking away of KG-D6 area on expiry of contractual timelines, Pradhan said.

He also said the Directorate General of Hydrocarbons (DGH) had given various suggestions to improve the dispute resolution mechanism such as encouraging conciliation proceedings, examination by multi disciplinary teams on potential litigations and timely appointment of arbitrators.

The minister said arbitrators and counsel are being appointed timely, contractors are being provided a forum in the ministry for resolving disputes and meetings are being held at various levels to sort out the issues related to gas balancing abandonment obligations etc.

Last week, parliament’s Public Accounts Committee held that RIL is entitled to recover all costs incurred on unviable gas discoveries since the DGH had allowed the company to retain the entire KG-D6 block area in the first place.

The PAC report has thus gone against India’s official auditor, which in 2011, had criticised the petroleum ministry for allowing RIL to retain its entire eastern offshore KG-D6 block, in contravention of the production sharing contract (PSC) under which only the area where discovery is made is permitted to be retained after the exploration period.



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