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

India-Nepal Ties

REUTERS SHOWCASE

Wipro Reaps Profit

Wipro Reaps Profit

Wipro Q1 profit up 30 pct on new contract wins   Full Article 

Monsoon Revives

Monsoon Revives

Monsoon revival keeps rain above average   Full Article 

Tackling Food Prices

Tackling Food Prices

India to free up extra 10 million tonne wheat in open market  Full Article 

Facebook Results

Facebook Results

Facebook beats Wall Street targets, stock hits record high  Full Article 

Struggling Economies

Struggling Economies

Asian economies to struggle on weak export demand - Reuters poll  Full Article 

Mining Roadblock

Mining Roadblock

Coal India's plans for 20 mines hit by land, environment delays  Full Article 

Power Jolt

Power Jolt

UAE's TAQA pulls out of India power plant deal with Jaiprakash  Full Article 

Factory Sector

Factory Sector

China July HSBC flash PMI at 18-month high of 52.0   Full Article 

Reuters India Mobile

Reuters India Mobile

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