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RIL arbitration case: Will follow court order, says Oil Ministry

Days after the Supreme Court dismissed its plea seeking removal of a foreign arbitrator appointed by Reliance Industries, the Petroleum Ministry Thursday said it will follow the court order in the dispute over Panna-Mukta and Tapti oil and gas fields.

“Whatever the Court has ordered we will do,” Oil Secretary Kapil Dev Tripathi told. “I mean, we will do whatever is necessary.”

While dismissing the ministry’s plea, the apex court had on Tuesday termed it as “an abuse of the process of the Court” as the issue had been settled twice before.

It stated that it has already been determined both that the judicial seat of the arbitration is at London and that the arbitration agreement is governed by English law.

The government had moved the court seeking removal of Peter Leaver, who was appointed by RIL and its partner British Gas as their arbitrator to resolve a dispute over western offshore PMT fields, alleging he was biased in RIL’s favour.

In May last year, the Supreme Court had set aside the Delhi High Court order and allowed the arbitration over disputes related to cost recovery, royalty and tax to take place in London.

While Leaver was nominated by RIL on the arbitral panel, the government had initially named Justice B P Jeevan Reddy as its nominee but when he quit, former Supreme Court judge B Sundershan Reddy was named. Christopher Lau, a Singapore-based lawyer, is the third neutral arbitrator and the chairman of the panel.

The government had demanded that Leaver step down as he was biased against the government and sought to reopen the issue of the validity of the arbitration proceedings, which began in 2014.

RIL and BG hold 30 per cent each in the field while state-owned Oil & Natural Gas Corp (ONGC) has the remaining 40 per cent interest.

The arbitration was initiated as RIL and BG sought an increase in field operation costs that they could deduct from sale of oil and gas as expenses before declaring the profit to be shared with the government.

The cost recovery is fixed in the contract at USD 545 million in Tapti gas field and USD 577.5 million in Panna-Mukta oil and gas field. The two firms want that cost provision be raised by USD 365 million in Tapti and USD 62.5 million in Panna-Mukta.

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