RIL serves arbitration notice to GoI over delayed gas price revisionRIL serves arbitration notice to GoI over delayed gas price revision

Reliance Industries (RIL), BP and NIKO have issued a Notice of Arbitration on May 9, 2014 to the Government of India (GoI) seeking the implementation of the ‘Domestic Natural Gas Pricing Guideline 2014’ notified on January 10, 2014. The continuing delay on part of the GoI in notifying the price in accordance with the approved formula for the gas to be sold has left the parties with no other option but to pursue this course of action. Without this clarity, the parties are unable to sanction planned investments of close to $4 billion this year. In addition, this will also delay the ability of the parties to appraise and develop other significant discoveries made last year. Overall, the parties were planning to invest $8-10 billion in the next few years to significantly increase production from the KGD6 block. This domestic production is essential for meeting India’s energy needs and will also help conserve foreign exchange which is required for imports of natural gas into India at the present time. All of this requires clarity on pricing.