Online

See all articles

Trio ordered to pay Indian government $3bn penalty

Local reports claim ONGC, Reliance and Shell have been hit with large bill for oilfield off India 

The Indian government has reportedly ordered local companies Reliance Industries and Oil & Natural Gas Corporation, along with Anglo-Dutch supermajor Shell, to pay a $3 billion payment.

The Economic Times reported the penalty followed an arbitration award in the Panna Mukta Tapti (PMT) oilfield dispute that went in favour of the government.

The newspaper reported that an arbitration panel upheld the government’s view that profit from the field should be calculated after deducting the prevailing tax of 33%, and not the 50% rate that existed earlier.

As a result, the government’s share of profit from output from the PMT field will “significantly” increase, with India’s Oil Ministry sending out demand notices for each of the three companies to pay their share of the penalty according to their interest in the PMT field.

ONGC holds a 40% stake, while Reliance and Shell each hold a 30% interest.

According to the Economic Times, Reliance and Shell have appealed the arbitration award in a UK court.