Govt disallows $1.2 bln RIL cost recovery - reports

MUMBAI Fri May 4, 2012 10:56am IST

Reliance Industries KG-D6's facility located in Andhra Pradesh is pictured in this undated handout photo. REUTERS/Reliance Industries/Handout

Reliance Industries KG-D6's facility located in Andhra Pradesh is pictured in this undated handout photo.

Credit: Reuters/Reliance Industries/Handout

Related Topics

Stocks

   

MUMBAI (Reuters) - The petroleum ministry has struck down Reliance Industries Ltd's (RELI.NS) plan to recover $1.2 billion in costs before the energy major starts sharing profits with the government from its gas field off the Andhra coast, newspapers reported on Friday.

The ministry has disallowed the costs recovery from the KG D6 gas field because of Reliance's failure to meet drilling commitments and blamed the company for violating production sharing contract obligations, the Business Standard said, citing a notice sent to the company.

Calls to a Reliance spokesman was not immediately answered.

Under India's exploration policy, the government allows companies to first recover their cost from oil and gas revenue, and subsequently share profits with the government.

Reliance's growth outlook has been marred by falling gas output from its huge gas fields, with production less than half of what was originally estimated.

The CAG last year criticised both Reliance and the government over development of the KG gas field, and the company's shares slumped by a third in 2011.

The company has earlier said unexpected geology has caused the decline in output and drilling more wells would not help, but this has been rejected by the oil ministry.

In November, Reliance had sent an arbitration notice to the government over cost recovery, but the ministry has so far refused to join arbitration.

(Reporting by Prashant Mehra; Editing by Ranjit Gangadharan)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Wal-Mart India

Wal-Mart India

Murali Lanka appointed as Wal-Mart India operations chief  Full Article 

Microsoft Earnings

Microsoft Earnings

Microsoft sales beat Street hopes, cloud profits up.  Full Article 

Special Report

Special Report

Why Madrid's poor fear Goldman Sachs and Blackstone  Full Article 

U.S. Economy

U.S. Economy

Spectre of no-inflation world looms over Fed's return to normal  Full Article 

Insider Trading

Insider Trading

Rengan Rajaratnam, SEC to settle civil insider trading charge.  Full Article 

Market Watch

Market Watch

Betting on the beaten up? Investors pin hopes on stocks in Europe, Japan.  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage