Joint oil hunt to avoid tiffs

The new oil and gas exploration policy has proposed mandatory joint development of a field with a common reservoir to prevent disputes, like the one between ONGC and RIL over KG Basin.

"In the event, the contractor determines that the reservoir in its contract area is extending into the contract area developed by another entity authorised by the government, the contractor shall submit an application for joint development of the reservoir to the government," the draft model revenue sharing contract said.

The first round of bidding under the new Open Acreage Licensing Policy is to be held in July, which would give companies not only pricing and marketing freedoms but also an opportunity to identify the areas for exploration.

The contractor is expected to provide all the relevant details about the reservoir in the joint development application to the government and also share it with the other contractor. If the government, after a preliminary evaluation, finds that the reservoir is common, it will direct both contractors to "carry out a hydrocarbon balancing study and submit a proposal for joint development".

In the absence of an agreement between the contractors, the government will call for a joint development plan from an independent agency.

"Such a joint development plan, if approved by the government, shall be binding on the contractors, notwithstanding their disagreement," the draft contract said.

The model revenue sharing plan also suggests joint development of common infrastructure.

"The contractor and other party(ies) having rights over any other block, whether such block lies adjacent to the contract area or not, can mutually agree to the terms and conditions of using for their respective petroleum operations any infrastructure already existing in relation to any block or contract area; or develop common infrastructure," it said.

ONGC and Reliance are locked in a long legal dispute after it was found that as much as 11.122 billion cubic metres of ONGC gas had migrated from its Godavari-PML and KG-DWN-98/2 blocks to adjoining KG-D6 of RIL between April 1, 2009 and March 31, 2015.

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