Reliance Industries issued notice for alleged $1.55 billion gas theft from ONGC fields

The Bombay High Court has issued a notice to Reliance Industries Limited (RIL) and its directors, including Mukesh Ambani for 'stealing' natural gas from the wells of KG Basin off the coast of Andhra Pradesh. The notice was issued on a petition seeking CBI investigation into the alleged theft worth over $1.55 billion. In the petition, it has been alleged that RIL drilled the KG-D6 blocks between 2004 and 2013-14 in a manner that led to the extraction of gas belonging to ONGC’s northern fields, reported Zee Business.

The alleged theft of gas is estimated at a value of over $1.55 billion (around Rs 13,000-14,000 crore), while the interest sums to be about $174.9 million. Theft, fraud and criminal breach of trust are the charges against RIL.

The CBI and Union government have been asked by the Bombay High Court to respond in the case by November 11.

RIL's Defence

RIL argues that the extraction was legal as the gas was “migratory” -- naturally crossing block boundaries. It says that the controversy is not new and is part of an older civil–arbitral dispute.

Petroleum consulting company DeGolyer and MacNaughton did say that gas migration occurred, but whether there were legal implications was not clear.

What did the court say?

The court has asked the CBI and Union government whether a full CBI probe is needed, an FIR should be filed and any contractual seizure is warranted.

Issuing a notice is the first procedural step, and does not indicate guilt.

If CBI takes up investigation in the case then major resource-related disputes may involve criminal liability other than just civil claims, the Zee Business report said.

The scale of alleged irregularity in a resource-based contract makes the case significant. It also raises questions around corporate liability and contract norms as analysed by experts.