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<keyword id="6355199" type="CITY" weightage="20" keywordseo="Reliance-Industries">Reliance Industries</keyword>' partners are considering joining the arbitration that the Mukesh Ambani-run firm is planning to initiate against the government for slapping a USD 1.55 billion demand for "unfairly enriching" by producing natural gas belonging to <keyword id="6354737" type="CITY" weightage="20" keywordseo="ONGC">ONGC</keyword>. 
 According to a news agency, <keyword id="3818195" type="UNKNOWN" weightage="20" keywordseo="calgary-based-niko-resources-ltd">Calgary-based Niko Resources Ltd</keyword>, which holds 10 per cent interest in RIL-operated KG-DWN-98/3 or KG-D6 block, said the partners believe they are "not liable for the amount claimed by the <keyword id="6377129" type="ORGANIZATION" weightage="20" keywordseo="Government-Of-India">Government of India</keyword>." 
 In an emailed statement, it said it "is considering joining RIL in invoking the dispute resolution mechanism in the Production Sharing Contract (<keyword id="6367605" type="ORGANIZATION" weightage="20" keywordseo="PSC">PSC</keyword>)." 
 The oil ministry had on November 3 issued a notice to RIL, <keyword id="570359" type="COMPANY" weightage="20" keywordseo="Niko">Niko</keyword> and UK's <keyword id="32848" type="ORGANIZATION" weightage="20" keywordseo="BP">BP</keyword> plc seeking USD 1.47 billion for producing in the seven years ended March 31, 2016 about 338.332 million British thermal unit of gas that had seeped or migrated from state-owned Oil and <keyword id="123483" type="CITY" weightage="20" keywordseo="Natural-Gas-Corp">Natural Gas Corp</keyword>'s (ONGC) blocks into adjoining KG-D6 in <keyword id="55869" type="UNKNOWN" weightage="20" keywordseo="Bay-of-Bengal">Bay of Bengal</keyword>. 
 
After deducting USD 71.71 million royalty paid on the gas produced and adding an interest at the rate of Libor plus 2 per cent, totalling USD 149.86 million, a total demand of USD 1.55 billion was made on RIL, BP and Niko. 
 
RIL had on Friday stated that it "proposes to invoke the dispute resolution mechanism in the PSC and issue a Notice of Arbitration to the Government." 
 
"RIL remains convinced of being able to fully justify and vindicate its position that the government's claim is not sustainable," the company had said, adding it has worked within the boundaries of the KG-D6 block awarded to it and has complied with all applicable regulations and provisions of the PSC. 
 
"The claim of the government is based on misreading and misinterpretation of key elements of the PSC and is without precedent in the oil and gas industry, anywhere in the world," it had said. 
 
BP, which holds the remaining 30 per cent interest, said it is evaluating its options. 
 "BP believes that the action taken is neither in line with well-established global practices nor is it in line with the PSC. We are aligned and working with our partners to evaluate our options to achieve an effective resolution," a <keyword id="367087" type="COMPANY" weightage="20" keywordseo="BP-India">BP India</keyword> spokesperson said. 
 Originally, ONGC had sued RIL for producing gas that had migrated from its blocks KG-DWN-98/2 (KG-D5) and <keyword id="2141893" type="UNKNOWN" weightage="20" keywordseo="Godavari-PML">Godavari PML</keyword> in the KG basin to adjoining KG-D6 block of RIL. 
 Under direction of the <keyword id="6355014" type="ORGANIZATION" weightage="20" keywordseo="Delhi-High-Court">Delhi High Court</keyword>, the government had appointed a one-man committee under retired Justice A P <keyword id="1858" type="PERSON" weightage="20" keywordseo="Shah">Shah</keyword> to go into the issue. The panel in its report on August 29 felt that the government and not ONGC is entitled to compensation. 
 
Subsequently, the ministry asked its upstream technical arm DGH to calculate the amount of compensation and a demand notice was slapped on RIL-BP-Niko. 
 
"The committee has concluded that the contractor's (RIL- BP-Niko) production of migrated gas and retention of ensuing benefits amounts to unjust enrichment, since the production sharing contract (PSC)... does not permit a contractor to produce and sell migrated gas," the November 3 demand note said. 
 
The ministry said it had accepted the Shah committee report and consequently "it has been decided by the government to claim restitution from the contractor of the block KG-DWN- 98/3 for the unjust benefit received and unfairly retained by them".

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Partners of Reliance might be joining arbitration in $1.55 bn gas row

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