Deora rules out government intervention in RIL gas pricing

03 August 2007

Mumbai: The government will not intervene in the pricing of gas from Reliance Industries'' KG basin field as the new exploration policy guaranteed market-determined prices to companies taking the risk of investing in the country''s oil and gas sector, petroleum minister Murli Deora said.

Mukesh Ambani-controlled RIL has proposed to sell gas from the KG offshore gas fields at a price between $4.58 and $4.33 per million British thermal units (with the dollar on a Rs41-Rs45 band).

The petroleum minister''s assurances come amidst reports that in view of the opposition to RIL pricing, a committee of secretaries is looking into the issue.

Under the New Exploration Licensing Policy (NELP), successive governments - first the NDA government at the centre and then the UPA - had promised marketing freedom to companies investing in the country''s oil and gas exploration sector. To impose price cap on gas after RIL announcing plans to start production from July 2008, would be reneging on the signed contract for the KG-D6 block and would not stand scrutiny of any court, official sources cited Deora as telling Andhra chief minister Y S Rajasekhar Reddy.

The block was awarded to RIL in the first round of global bidding under NELP in 2000.

Deora, however, declined to consider Reddy''s suggestion for the government to take physical delivery of its share from the KG-D6 block as the volumes may vary from year to year and would require the government setting up infrastructure for that.