RIL, BP on way to end dispute with government

RIL, BP on way to end dispute with government

Reliance Industries (RIL) and joint venture partner BP Plc are moving towards ending their dispute with

the government on gas pricing, but are yet to officially approve the proposal for it, industry sources said.

RILBSE 0.08 % and BP declined to comment on the matter.

RIL, BP and their partner Canada's Niko Resources are contemplating pulling out of the arbitration

against the government as the government's policy changes announced in March requires them to drop

the case if they want to accept the higher gas prices being offered.

On April 13, EThad reported that RIL, BP and Niko have formally started the process of developing their

deep sea fields, which industry executives say signals their intention to withdraw arbitration against the

government a necessary condition if they want to charge market price for natural gas. At that time, BP

had said: "The recent reforms announced by the Government of India will provide the much needed

impetus to the Indian oil and gas industry. Together with our partners, we are working with the

Government to progress activities in our blocks."

In March, the government announced a new policy that links the pricing of gas from undeveloped

difficult fields such as deep sea and high-pressure, high-temperature areas to alternative fuels,

effectively doubling the prices. While the maximum price available to domestic natural gas is $3.06 per

unit, difficult fields can avail of $6.61per unit. But the policy states that any operator engaged in

litigation against the government cannot avail of these prices. Top executives of Reliance and BP met

government officials recently to discuss plans to develop discoveries affected by the new policy.

In a report on Wednesday, Bloomberg said RIL and BP intend to complete the withdrawal from multiple

arbitration proceedings, at least one dating back to 2011, before they finalise plans to restart developing

discoveries in the KG-D6 block off the east coast of India, among other exploration areas they hold.

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