The government has ordered Reliance Industries (RIL), Shell and ONGC to pay a combined $3 billion in penalty following an arbitration award in the Panna Mukta Tapti (PMT) oil field dispute that went in its favour, the Economic Times reported today, citing people familiar with the matter.
As per a demand notice sent to the three companies by the Oil ministry last month, these firms are required to pay penalties proportionate to their stake in the field, the report said. While Reliance and Shell own 30 per cent each in the PMT fields off the Mumbai coast, ONGC owns the balance 40 per cent participating interest.
The arbitration panel had upheld the government view that the profit from the fields should be calculated after deducting the prevailing tax of 33 per cent, and not the 50 per cent rate that existed earlier. This will significantly increase the government’s share of profit petroleum. The tribunal also upheld the government’s position that marketing margin should be included in the price of gas, which would also increase its share of profit petroleum as well as a royalty payment, the report added.
RIL and Shell have appealed the arbitration award in a UK court. The PMT arbitration case is one of the many disputes Reliance is fighting with the government. Reliance and partner BP just last month withdrew the gas price-related arbitration against the government. Reliance also withdrew another arbitration last year related to a government order to relinquish 80 per cent of KG-D6 block that the company operates.