RIL criticises unstable policy

Also threatens to go for arbitration if asked to supply gas at old rates

Reliance Industries Ltd (RIL) on Tuesday lashed out at the lack of stability in the policy regime in the oil and gas sector in India, saying that’s why foreign companies are alienating the country.

The company also hinted it had no option except arbitration if forced to supply gas at old prices for commitment shortfall of gas.

“There is a continuous erosion of NELP (New Exploration Licensing Policy) by taking away several of rights that have been given under the policy. If you expect any investor to come in and invest either in technology or put in investments that are required in exploration, appraisal and development, you need a stable policy regime,” said P M S Prasad, executive director and board member. He also said it was due to this lack of clarity that foreign companies such as British Gas, Shell, BHP Billiton, StatOil and Petrobas exited India.

“You have to compensate this poor prospectivity by giving an attractive fiscal regime. Which we are not doing, and we think that the Indian basins are better than that of Saudi Arabia. Then somebody is probably day-dreaming. Moreover, you then take away whatever the little incentives that were given,” he added.

 

The finance ministry had written to the oil ministry asking it to look into whether RIL could be asked to supply gas at old price of $4.2 a million British thermal unit (mBtu), to make up for the shortfall of supply from RIL’s KG-D6 block.

 

Prasad said, “I don’t know if that is true; if it is, then we have a problem. It is a violation of production-sharing contract. Then, whatever dispute mechanism is available, we will have to go by that.”