Amidst move to force Reliance Industries to sell gas from its main fields in KG-D6 block at old rates of $4.2, the Mukesh Ambani-run firm on Tuesday hit out saying the government was not honouring signed contracts and extraneous factors were being brought into business.
RIL, which has faced numerous delays in getting approvals and shifting goal-posts, said the country did not have a stable policy regime and this was responsible for exit of global energy giants like Royal Dutch Shell, BHP Biliton of Australia, Statoil of Norway and Brazil’s Petrobras. “It is there for everyone to see. We dont have a stable policy regime which is very very essential if you expect any investor to come in and invest either in technology or put in big risk investment that are required in (oil and gas) exploration, appraisal and development,” RIL executive director PMS Prasad said on sidelines of a FICCI conference.
New Exploration Licensing Policy (NELP) has been continuously eroded by “taking away several of the rights (of companies,” he said.
The policy assures investor of freedom to market oil and gas produced from areas they explore. NELP also provided for market determined pricing of both oil and gas. While the government is now identifying customers and nominating quantities to be sold, it is now mandating a price according to a formula given by a committee under Prime Minister’s economic advisor C Rangarajan.
The price of gas according to the Rangarajan formula would have doubled to $8.4 per mBtu in April 2014 when a revision in KG-D6 price is due, but the oil ministry is moving Cabinet with a suggestion made by finance ministry to ask RIL to sell gas it has failed to deliver in past two years at the old price of $4.2.