Reliance moves SC seeking arbitration on KG-D6 dispute

Reliance Industries Ltd has moved the Supreme Court against the petroleum ministry for not appointing an arbitrator to resolve the dispute over the recovery of cost for developing the KG-D6 gas filed, off the eastern coast.

Mukesh Ambani-led Reliance Industries Ltd (RIL) has moved the Supreme Court against the petroleum ministry for not appointing an arbitrator to resolve the dispute over the recovery of cost for developing the KG-D6 gas filed, off the eastern coast.

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A spokesperson of RIL confirmed the development and company sources said advocate Harish Salve is likely to represent RIL in the SC.

RIL had initiated arbitration proceedings against the petroleum ministry in anticipation of the latter’s move to restrict the cost recovery by the company in developing the KG D6 field after gas production from the field dipped to 35 mmscmd from the earlier peak of 61.5 mmscmd.

Though the directorate general of hydrocarbons (DGH) had advised the ministry to disallow around Rs 6,000 crore out of the Rs 26,000 crore expenditure made by RIL in exploring the KG D6, the petroleum ministry never imposed any such restrictions on RIL. However, the company in anticipation slapped an arbitration notice.

The DGH advice was due to the inability of RIL to drill and complete the agreed 31 wells in the block, resulting in lower gas output. RIL had drilled only 18 wells in the KG D6 block.

The ministry had been asking RIL to withdraw its notice as dispute on the issue had not arisen yet.