RIL mounts counter to govt. petition seeking to block its $15 billion Aramco deal

Reliance Industries (RIL) has given a strong counter to the government petition in the Delhi High Court (HC) asking to block its $15-billion deal with Saudi Aramco, it said that the petition is an abuse of process as a arbitration award was fixed, that gave the final liability of dues on the company. RIL said in a counter affidavit that it was a ‘falsehood’ saying that arbitration tribunal had passed an award requiring the company and its partners to pay $3.5 billion to the government. It also said the petition was an abuse of process as it shows that a sum of money is due and payable under the final award and falsely shows to be calculated. It also said that the government has calculated on its own volition the revised figure of its share of profit from oil and gas production, supposedly due by extending the application of the false finds.

The affidavit came in response after the government moved to Delhi HC, seeking to block RIL selling a 20 per cent stake in its oil-and-chemicals business to Saudi Aramco for $15 billion, because of dues of $3.5 billion in the Panna-Mukta and Tapti oil and gas fields.

An international arbitration tribunal already issued a partial award in October 2016 in the dispute between the Government of India (GoI), BG Exploration & Production India (BG), and RIL regarding the Panna-Mukta and Tapti production sharing contracts (PSCs). It in 2016 found certain issues of principle.

Since there were pending determination of all issues before it, the arbitration tribunal did not award any monetary sums. Amounts are decided only when the decisions are settled.

Some parts of the 2016 award was challenged by BG/RIL before an English court and the court decided that some parts of challenge are in favour of BG/RIL and directed the arbitration tribunal to reconsider those parts of the 2016 award. The tribunal, after reconsidering, issued another partial award in December 2018 in favour of BG/RIL. Even though some decisions were pending in the English court, the government unilaterally calculated certain amounts, based on its 2016 award, which the government CLAIMS are payable by Oil and Natural Gas Corporation (ONGC), BG, and RIL. RIL said in accordance to the 2018 award, the government’s claim comes down very significantly especially when government has not taken notice of and approached the Delhi HC prematurely for enforcement of its claim which was calculated based on its interpretation of the 2016 award. The government has challenged the 2018 award and the English court is yet to pronounce its judgment.One of the most important issues pending before the tribunal is an increase in the cost recovery limit under the PSC. The arbitration tribunal is scheduled to hear BG/RIL’s application for increase of PSC cost recovery limit next year. If the tribunal decides in favour of BG/RIL, then the government’s calculated sum is expected to come down.

Final amounts payable, if any, by ONGC 40 per cent, BG 30 per cent, and RIL 30 per cent can only be determined by the arbitration tribunal in the quantification phase of the arbitration which will be scheduled after it has decided on all the issues before it.

ONGC, which was directed by GoI in 2011 not to partake in the arbitration proceedings but be under the restriction by the award, wrote to the stock exchanges in May 2018 stating that the government’s demand is premature. RIL said that the 2016 award which was corrected by the 2018 award, cannot be said to be final and any attempts to enforce the 2016 award are premature.