Won't Succumb To Pressure In Resolving Oil Disputes: Government

New Delhi: Government will not succumb to any pressure in resolving pending arbitration disputes with companies such as Reliance Industries over KG-D6 gas fields, Oil Minister Dharmendra Pradhan said in Rajya Sabha today.

"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," he said during Question Hour.

His reply came when BJP member Bhola Singh asked whether there was any pressure or compulsion for the government as there have has been delay in resolving oil field disputea with private petroleum companies, including Reliance Industries.

Mr Singh asked the government to take strict decisions in resolving all such disputes with private petroleum companies.

Mr Pradhan said the NDA government has inherited some problems from the previous UPA dispensation which had led to delay in resolving the disputes.

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

Reliance Industries Limited (RIL) had initiated as many as four arbitrations against the government including one seeking higher gas price for its existing flagging fields in KG-D6 block in Bay of Bengal.

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Another arbitration pertains to slapping of penalty in the form of disallowance of cost recovery and one for taking away of KG-D6 area upon expiry of contractual timelines, the Minister said.

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

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He said the government has enhanced the powers of DGH for hiring of counsels for defending arbitrations. In the policy for extension of Production Sharing Contracts (PSC), for small and medium sized discovered fields, the seat of arbitration during the extended period has been kept in India.

Mr Pradhan said arbitrators and counsels are being timely appointed, 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.

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"Good International Petroleum Industry Practices have been codified and Guidelines for Site restoration have been prepared to reduce ambiguity on these aspects, thereby reducing the possibility of litigation," he said.