Reliance Industries Ltd-BP-Niko Resources partners in the Krishna Godavari Basin acreage may not get advantage of new gas price for their producing fields – D-1, D-3 – in the D6 block.

The Ministry for Petroleum and Natural Gas is expected to have clarity on the new price for domestically produced gas by September 30. Sources in the know of the development said that the Cabinet proposal circulated by the Oil Ministry seeks new price for domestically produced natural gas. But Reliance’s D6 producing fields will be treated separately.

This is because the contractors are already in arbitration with the Government on two issues – proposed cost recovery by the Government for RIL-BP-Niko not being able to meet the committed output from the fields, and delay in implementation by the Government of the “Domestic Natural Gas Pricing Guideline 2014” notified on January 10. “The report submitted by the senior official level panel had been discussed over the weekend and the Cabinet Committee on Economic Affairs is now ready to take it up. There will be complete clarity on the gas price by September 30,” a Government official said.

The official declined to state whether the gas pricing issue will be taken up at the CCEA meeting scheduled for Wednesday. Prime Minister Narendra Modi leaves for the US visit on September 26, leaving little time for the CCEA to take up the matter.

RIL and its partners in D6 block have been criticised for not being able to contain the fall in output from D-1 and D-3 fields of the KG block after it had hit a peak of 61 million standard cubic metre a day (mmscmd). The current output from D-1, D-3 and MA fields in the block is about 12 mmscmd.

While deferring its decision to implement the new gas price by three months on June 25, the Government had said that the new price will be in place by September 30. It had constituted an inter-ministerial official panel comprising secretaries of Power, Fertiliser and Expenditure and Additional Secretary of Ministry of Petroleum and Natural Gas as the member secretary. The committee submitted its report last week, which had to be discussed by an informal panel of ministers. It is expected that the new price of domestically produced gas will hover around $6/unit-$7/unit.

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