RIL refuses to revoke arbitration notice, say sources

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RIL refuses to revoke arbitration notice, say sources

Reliance Industries (RIL) will not withdraw an arbitration notice that it had issued to the government countering the petroleum ministry's decision to restrict the cost that the company wants to recover in the KG-D6 block before sharing the profit from the sale of gas with the government. CNBC-TV18 has learnt.

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Reliance Industries (RIL) will not withdraw an arbitration notice that it had issued to the government countering the petroleum ministry's decision to restrict the cost that the company wants to recover in the KG-D6 block before sharing the profit from the sale of gas with the government, CNBC-TV18 has learnt.

RIL had slapped a notice to the government in November last year saying that it has not drilled the committed wells as the reservoir has not behaved as previously predicted and hence the company has still not recovered its costs on the project.

Under the KG-D6 production sharing contract (PSC) signed between RIL and the government for the KG-D6 project, RIL was allowed to recover the complete expenditure that it had incurred to develop the fields before it starts splitting profits with the government.

RIL argues that it has still not recovered costs it incurred on the project and hence cant share profits right now.The company, it is learnt is adamant to not take back the notice it served to the government.

However, the ministry is of the opinion that as on date, there is no cause of action for RIL to raise a dispute under the provision of the production sharing contract (PSC) that entitles the company to move for arbitration. Hence, RIL should revoke its arbitration notice.

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