Millennium Post

Govt move to force old gas price for KG-D6 illegal: RIL

Lashing out at a move to force it to sell gas from main KG-D6 fields at old rate of $4.2, Reliance Industries said the 'illegal' action runs contrary to the signed contract and will stifle private investment in oil and gas hunt.

While the Cabinet has approved doubling of gas price from 1 April next year, Oil Ministry is proposing that old rates of $4.2 per million British thermal unit apply to gas from D1/D3 and MA fields in eastern offshore KG-D6 block till it proved that RIL had proved less than targets only because of geological factors.

In a strongly worded letter, RIL on 3 September wrote to Oil Minister M Veerappa Moily saying the signed production sharing contract (PSC) does not bind a contractor to indicative production numbers.

'Neither the PSC nor the field development plan (or investment proposal) even suggest that a shortfall in production can be considered a breach for which penalties can be levied,' RIL executive director P M S Prasad wrote.

RIL, he said, has on numerous occasions asked government to appoint an independent and industry renowned third party technical expert to verify performance of the fields and see if the company was hoarding gas to get benefit of higher price.
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