Oil Ministry returns RIL’s bank guarantee

The Ministry of Petroleum and Natural Gas has returned the bank guarantee furnished by Reliance Industries Ltd (RIL) to benefit from the new gas price. The Ministry has done so as the new gas price is yet to be announced.

Last week, RIL had given a bank guarantee to the Ministry to avail of the new gas price, which is expected to be almost double of the current $4.2/unit (gas is measured in million British thermal unit).

Sources in the know of the developments told

Business Line , “RIL had given bank guarantee based on the formula – multiplying the actual daily output by the difference between the current price and the new proposed price. Also, it had paid guarantee for only its stake in the KG-D6 block.”

The new price, which RIL had worked out, was about $8.2-8.4/unit.

Besides, the Ministry is yet to sort out differences with RIL on the scope of the guarantee and whether the Indian firm’s foreign partners in the block – BP and Niko – can also be party to the guarantee.

The three consortium partners in KG-D6 block believed that the guarantee has to be paid by them jointly depending on their stake – RIL 60 per cent, BP 30 per cent, Niko 10 per cent.

But till now, the Government has been keeping BP and Niko out of the bank guarantee. The Petroleum Ministry is independently examining whether RIL’s foreign partners can become a party to the bank guarantee.

The current output from the D-1, D-3 and MA fields of the block is 12.5 mmscmd (million standard cubic metre).