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RIL wants new price for its gas treasure.

IN ITS continuous attempt to get a market- driven price for natural gas, Mukesh Ambani- led Reliance Industries Ltd ( RIL) has informed the government of its newfound large gas reserves but would explore, produce and develop it only if allowed to sell for, at least, $ 10 per million British thermal unit ( mmBtu) as against the current price of around $ 4 mmBTu.

RIL, which has been seeking a rate equivalent to import parity price for Krishna- Godavari ( KG)- D6 Basin gas from April 2014, said in an 18- page submission to the C. Rangarajan Committee that it gets paid $ 4.2 per mmBtu for the gas produced from its KG- D6 fields in the Bay of Bengal. It wants the government to revise the price to $ 14.2 mmBtu.

The Committee is examining terms of future contracts for exploration of oil and gas as well as basis for gas pricing. RIL said that only market- related prices can provide an incentive to help produce the vast domestic resources that are either concentrated in small pools or are located in technologically challenging ultra deep sea.

RIL and partner British Petroleum ( BP) have around 5.5 trillion cubic feet of discovered gas resources which would require large amount of risk capital to be invested. " Most of these discoveries would require price of more than $ 10 per million British thermal unit to be developed and produced," RIL said.

" There is no finding or observation in the judgment of the Supreme Court ( SC) which entitles the government to arbitrarily or unilaterally fix the price of gas and require the contractor to sell gas at a price which is not the market price of natural gas in the country," RIL added.

According to the May 2010 SC judgment in RIL's gas dispute with Reliance Natural Resources, the government should revise the price if the rate at which the contractor sells gas under a formula is not the market price.

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Publication:Mail Today (New Delhi, India)
Date:Nov 19, 2012
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