| Mukesh cites development clause to SC | |
| Ajay Modi & Jyoti Mukul / New Delhi July 17, 2009, 1:00 IST | |
 Development plan for K-G basin runs for 12 years, so can’t supply to RNRL for 17 years, says RIL.
Reliance Industries (RIL), which is fighting a legal battle with Reliance Natural Resources Ltd (RNRL), has argued in its petition to the Supreme Court that it is impossible to enter into a gas supply commitment with RNRL for the period under issue, 17 years, because the development plan for its producing KG-D6 field is only for 12 years, ending 2020.
A development plan, approved by the regulator, the directorate general of hydrocarbons, usually lays down the expenditure heads and production profile of a field. RIL has said it is not possible to make any supply commitments to any party for a period beyond 12 years.
Interestingly, RIL is fighting another case with power major NTPC which is on a contract for a 17-year duration.
An RNRL official, however, said RIL had an obligation to supply 28 mmscmd (million metric standard cubic metres per day) of gas and it could supply that quantum to RNRL from the additional wells in the K-G basin that would become operational in due course of time. "They should supply us the quantity from any of their fields.”
RIL has argued in its petition that the Mumbai high court judgement, which it is appealing against, had ordered the supply of gas not just from the present fields but from other developments in the area, “completely overlooking” the fact that there could not be a firm contract for a quantity on the hope that the discoveries would yield similar gas quantities.
The Anil Ambani-promoted RNRL is laying claim (through a family agreement prior to the group’s split in 2005) to 28 mmscmd of gas from estranged brother Mukesh Ambani’s RIL at $2.34 per mBtu (million British thermal units) for 17 years. RIL, which started gas production from its KG-D6 block in April, has already entered into gas sale commitments for a five-year period with various users, at a price of $4.2 a mBtu fixed by the government.
On June 16, the high court passed a judgement directing RIL to supply 28 mmscmd of gas to RNRL at a price of $2.34 a mmBtu. RIL approached the SC where the next hearing is scheduled for July 20.
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