Moily says no reversal on call to hike natural gas prices from April

Ministry had recently imposed an additional penalty of $792 mn on RIL for missing the natural gas production target from its KG-D6 block

Petroleum Minister M Veerappa Moily on Tuesday said there was no going back on raising natural gas prices from April 1 and a notification would be issued shortly.

“Absolutely, there is no question of reversing the decision to hike natural gas prices, as proposed by the Rangarajan panel report, or going back on the decision. The notification regarding the implementation of the new price formula will be issued shortly,” he said.

Addressing a press conference a day after an investor meet, Moily also said the government was confident of resolving the issue of bank guarantees with Reliance Industries (RIL) within a fortnight. He said he expected the Supreme Court to appoint a third arbitrator in the RIL case soon, so that the issues between RIL and the government are resolved at the earliest.

The petroleum ministry had recently imposed an additional penalty of $792 million on RIL for missing the natural gas production target from its KG-D6 block, taking the total fine imposed on it since 2010-11 to $1.797 billion. The ministry might “disallow” a certain amount of cost recovery for the company every year, until the arbitration process on this was over. The bank guarantee would be encashed if it was proved that RIL hoarded gas or deliberately suppressed production at the D1 and D3 fields in KG-D6 block to take advantage of gas price revision, which comes into effect next April.

Gas production from the D1 and D3 fields had fallen to less than 10 million standard cubic metres a day (mscmd) from the peak of 54 mscmd in March 2010.

On RIL’s recent gas discovery, the minister said this could be the biggest in the country. In May, RIL had announced gas discovery in D-55, 2 km below the currently producing fields in the eastern offshore KG-D6 block. The discovery has been notified. RIL is the operator of KG D6 with 60 per cent equity. BP has a 30 per cent share and Niko Resources has 10 per cent.

India would launch the 10th edition of its New Exploration Licensing Policy (Nelp) by January 15, Moily said. Under this, 86 hydrocarbon blocks would be up for bidding, out of which 54 blocks have received clearances from various agencies. The remaining blocks will get the approval by the time it comes up for bidding in January.