RIL PRICE 'CUT' TO $4.2/UNIT
The empowered group of ministers (EGoM) has approved a modified pricing formula for Reliance Industries' KG Basin gas, lowering the proposed price at Kakinada to $4.2 per mmBtu from $4.33 per mmBtu. The price at which RIL will sell its gas from the KG Basin to consumers will be valid for five years, after which it will be open for revision. RIL will not be required to call for fresh bids.
The EGoM has said the decision taken at Wednesday's meeting will be without prejudice to the ongoing legal cases between RIL and Reliance Natural Resources (RNRL) or between RIL and NTPC, as they are sub judice. It remains to be seen as to how the outcome of the court cases impacts RIL’s plans to convert the bids into binding gas sales agreements and begin production by June, 2008. An interim stay by the Bombay High Court prevents RIL from allocating up to 80 million standard cubic metres of gas to any third party. ET has been on top of the developments in the gas pricing issue and was the first to report every major twist and turn. ET was also the first to report RIL's discovered gas price on June 9.
The EGoM has said all future contracts under the New Exploration and Licencing Policy will have a floor price of $2.5 per mmBtu, and gas producers will have to get the pricing formula approved before inviting bids from consumers. A pre-approved formula will ensure that disputes over gas prices will be avoided in future. The EGoM has also reinforced the government's commitments to all oil and gas companies by stating that all production sharing contracts will be honoured.
Source: Economics Times
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