RIL serves notice on govt decision to take away 81% of KG-D6

RIL serves notice on govt decision to take away 81% of KG-D6

Reliance Industries (RIL) has served yet another notice, its fifth so far, challenging petroleum ministry’s decision to take away 81 per cent area of KG-D6 block, including five discoveries estimated to hold nearly a trillion cubic feet of natural gas.

Documents with The Indian Express show that RIL issued notice dated January 14, 2015 demanding that the dispute on taking away the area be referred to arbitration, the relinquishment order be withdrawn and compensation be paid for breach of contract by the government.

The ministry issued the relinquishment order in October 2013 asking RIL and its partners BP and Niko Resources to give up 6,198.88 sq km out of a total 7,645 sq km area in KG-D6 block as the time allocated for producing from them had expired. They were allowed to retain only the portions where discoveries had been recognised by Directorate General of Hydrocarbons.

While claiming that 2013 order breached its right to retain the fields, RIL has countered that the time period for approving these discoveries ‘never expired’ as the block Management Committee had agreed to a phased approach for their development.

It said that the government had issued the order based on the ‘erroneous premise’ that the contractor (RIL) had failed to submit a development plan for these fields.

“In fact, the contractor had submitted the field development plan for all nine satellite discoveries (including the Second Phase Satellite Fields), and it had never withdrawn the FDP,” the ministry document quotes the RIL letter.

The arbitration notice comes just a month after the petroleum ministry shot off letters to the PMO for bringing to notice of the Prime Minister the four “high value” arbitration cases filed by RIL against the Union of India.

Two pertain to KG-D6 block: One on government disallowing about $1 billion on grounds of under-production of gas and under-utilisation of facilities and the second on government deferring gas pricing guidelines.

Third arbitration is on Panna, Mukta and Tapti fields where the government is opposed to RIL deducting more development expenses than the PSC limit. The fourth one is on 4 relinquished blocks where RIL is disputing the amount it has to pay as liquidated damages.

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