Ex-judge named arbitrator in RIL gas output case

The government Thursday appointed former Supreme Court Justice G.S. Singhvi as its arbitrator in the arbitration initiated by the consortium of Reliance Industries Ltd (RIL), Niko Ltd and BP on the output from the KG-D6 gas fields in the eastern offshore.

The ministry had in 2012 ordered a penalty of over $1 billion on RIL for failing to produce gas in line with the pre-stated targets. It had blamed the company for deliberately suppressing production by not drilling the required number of wells.

RIL has approached for arbitration against the order, saying the fall in output is owing to geological complexities and lower than anticipated reserves.

Acknowledging that the issue was under arbitration, Petroleum Minister Dharmendra Pradhan told parliament Monday that a fresh notice had been served on Reliance Industries seeking additional penalty for lower production of gas.

"The contractor of the block KG-DWN-98/3, M/s RIL has invoked arbitration against the action of the Ministry of Petroleum and Natural Gas of disallowing the cumulative development costs," the minister said.

RIL had nominated Sir David Steel as their arbitrator.