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Sunday, Dec 15, 2019

Centre seeks legal opinion on Reliance family demerger

The ministry wants to know if it must become party to the court case between the two brothers over implementation of the family demerger agreement.

business Updated: Feb 08, 2008 15:29 IST


Petroleum Ministry has sought Law Ministry's opinion to ascertain if Mukesh Ambani-run Reliance Industries' move to assign first right on gas produced from KG fields to a firm run by younger brother Anil violated the official contract for the fields.

The family agreement that split Dhirubhai Ambani empire between the two brothers, as has been upheld by the Bombay High Court, had created rights including claim over majority of the output from RIL's KG-D6 field, in favour of Anil's RNRL.

The Petroleum Ministry now wants to know if such a move amounted to Assignment of Participating Interest (PI) in the gas rich block, official sources said. As per the Production Sharing Contract (PSC) for KG-DWN-98/3 or KG-D6, assignment of any interest in the contract without prior consent of the Government may result in termination of the contract.

RIL is to start producing natural gas from KG-D6 in July but has not been able to sign contracts with consumers due to a restraint order from the Bombay High Court.

The ministry sought Law Ministry's opinion if the Government should intervene and become party to the court case between the two brothers over implementation of the family demerger agreement, in the national interest of starting gas output in time.

The start of 40 million standard cubic meters per day of gas production from KG-D6 may be delayed if the court ordered restraint on creation of third party interests was not lifted. RNRL claims right of 28 mmscmd as part of the demerger and another 12 mmscmd but will have no plants to utilise gas in July 2008. Trading of gas is not allowed as per Government policy.