RIL down 3% on arbitration proceedings against govt

Reliance Industries (RIL) is the largest loser among Sensex stocks, losing 3% at Rs 762, after sending an arbitration notice to the ministry of petroleum and natural gas (MoPNG) over its move to disallow some of the expenditure incurred in the KG-D6 gas field in view of falling gas production.

“The company was concerned by reports that the oil ministry would seek to restrict the amount of the costs recovered by the company from the revenues generated from the sale of gas produced from the D1 and D3 fields in the KG-D6 blocks," the country’s biggest private sector petroleum company said in a filing to the stock exchanges.

To finally resolve this cost recovery issues so as not to hinder future investments in this block, the company has began arbitration proceedings against the Government of India to have the company’s entitlement to recover its costs, and the validity of the stance adopted by the MoPNG, finally determined by an independent tribunal, it added.

The company would seek arbitration hearing at the earliest possible date. Besides, it maintained that the production sharing contract (PSC) contained no provision that entitled the government to restrict the costs recovered by the company by reference to factors like the production level or the extent to which field facilities were utilised.