News Detail

• The Petroleum and Natural Gas Ministry has stated that it would respond to the issues raised by Reliance Industries Ltd. (RIL) in its arbitration letter by January 31 as it is seeking the legal opinion on the issue.In a letter to RIL, the Ministry said it would need another month to respond to the issues raised by the company against the move to take penal action against it for the drastic fall in gas output from the KG basin D-6 block, off Andhra coast.RIL had on November 24 served an arbitration notice on the Ministry, terming the move to limit the amount of expenditure the company can recoup from its flagging KG-D6 fields in proportion to the gas production as illegal and outside the Production Sharing Contract (PSC).

Timeframe

• As per the PSC, the government has a timeframe of one month to respond to the notice. RIL and the government have the right to appoint one arbitrator each. A third neutral adjudicator is to be appointed by the two arbitrators.RIL would have got the right to appoint an arbitrator on behalf of the government if no response is made within the timeframe.The Petroleum Ministry is consultations with the Law Ministry on the issue and has sought a legal opinion on the RIL notice and on appointment of arbitrators.
• The Ministry was moving toward restricting cost-recovery, now at 100 per cent, in proportion to gas output from the KG-D6 fields.RIL has built the facilities to handle 80 million standard cubic metres a day of gas production, but the fields are producing less than half of that.Petroleum Minister S. Jaipal Reddy has maintained that all the 31 wells outlined in the development plan must be drilled by March, 2012, blaming the production decline on the failure to do so.

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