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    HomeBusinessGovt mulls appeal against English court’s order on dispute with RIL, Shell

    Govt mulls appeal against English court’s order on dispute with RIL, Shell



    Order relates to a $111-million arbitration award on the two production sharing contracts

    The Ministry of Petroleum and Natural Gas (MoPNG) on Monday said it is planning to appeal against the English High Court’s judgement in favour of Reliance Industries (RIL) and Shell-owned BG Exploration and Production India (BGEPIL) in a dispute related to the Tapti and Panna Mukta oil and gas fields off the coast of Mumbai.

    The order pronounced on Thursday (June 9) by Sir Ross Cranston at the English Commercial Court relates to a $111-million arbitration award on the two production sharing contracts (PSCs) — Tapti PSC and Panna Mukta PSC.

    “Government of India has the right to seek leave of English Commercial Court to challenge this judgment. Further, notwithstanding two partial awards of $111 million and $143 million in the favour of contractor, the larger award amounting to $3.85 billion plus interest by the arbitral tribunal under final partial award 2016 is in favour of the government, and is now being pursued through the execution petition filed before the High Court of Delhi,” MoPNG said in a statement.

    The ministry further said, “It is pertinent to mention that even in the latest award and order of the English Court dated June 9 ($111 million), contractor’s claim amounting to $148 million has been rejected.”

    The case

    In December 2010, RIL and BGEPIL (JV Partners) invoked an international arbitration (UNCITRAL claim) against India on cost recovery provisions, profit due to the State and amount of statutory dues including royalty payable. Both wanted to raise the limit of cost that could be recovered from oil and gas sales before profits were shared with the government.

    On December 22, 1994, India had entered into a PSC with State-run ONGC, RIL and BGEPIL. The government granted exclusive rights to the three entities to exploit both the fields for 25 years. The PSCs for Panna Mukta and Mid & South Tapti expired on December 21, 2019.

    ONGC had 40 per cent participating interest (PI) and was the joint operator in Panna-Mukta and Mid and South Tapti Fields along with RIL and BGEPIL, each having 30 per cent PI. So far, the arbitral tribunal has passed eight substantial partial awards. As many as 66 of the 69 issues were decided in favour of the Government of India in the final partial award passed by the tribunal in 2016, MoPNG said.

    Pursuant to the award, the government issued a demand letter to the contractors calling upon them to pay $3.85 billion (excluding interest). The contractor failed to make the payment as per the award. Therefore, the government has filed an application for execution of final partial award 2016 before the Delhi High Court, it added.

    Published on June 13, 2022

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