New Delhi, Nov. 4: The government has asked Reliance Industries Ltd (RIL) and its partners - BP and Niko - to respond within 30 days to a $1.55-billion penalty notice it has slapped on them today for extracting and selling gas belonging to state-run ONGC.

The Justice A.P. Shah committee had in a report to the oil ministry on August 30 said RIL should be asked to pay for the gas it had drawn from ONGC's two blocks in the Krishna-Godavari basin.

The two blocks are adjacent to the Reliance-operated KG-D6 block, in which UK-based BP holds a 30 per cent stake and Calgary-based Niko Resources has 10 per cent.

"RIL's action of producing and selling gas migrated from ONGC's block is unjust enrichment," the report said, adding that over 11 billion cubic metres (bcm) of gas had flowed from the ONGC block to RIL's fields between April 1, 2009 and March 31, 2015. A report submitted by DeGolyer and MacNaughton (D&M) in November 2015, too, had stated that about 11.12 bcm of ONGC gas had migrated to the RIL fields.

Oil ministry officials said probes had found that Reliance had overdrawn gas from ONGC's wells. The Shah commission had said RIL should pay the government for this act as the state was the owner of all oil and gas resources in the country and drillers and explorers such as RIL, ONGC and Indian Oil were merely operators.

After the Shah panel probe, the directorate-general of hydrocarbons (DGH) calculated the penalty figure with the help of international consultants, officials said. The DGH had taken RIL's capital and operational expenditure into account before coming up with the final penalty. ONGC's loss was based on a gas price of $4.2 per million British thermal unit.

Reacting to the development, RIL said it "proposes to invoke the dispute resolution mechanism in the PSC (production sharing contract) and issue a notice of arbitration to the government".

"RIL remains convinced of being able to fully justify and vindicate its position that the government's claim is not sustainable," a company said.

The company said it had worked within the boundaries of the block awarded to it and had complied with all applicable regulations and provisions of the PSC. "The claim of the government is based on misreading and misinterpretation of key elements of the PSC and is without precedent in the oil & gas industry, anywhere in the world," it said.

Shares of RIL fell 1.92 per cent today to close at Rs 1,005.80 on the BSE, following the news of the notice.