New Delhi: Reliance Industries on Thursday told
the Supreme Court it had vehemently protested against the
government taking away its freedom to market gas, whereas Anil
Ambani group had sought regulation of fuel sale through a gas
utilisation policy in 2007.
Resuming arguments over its dispute with Anil Ambani
Group firm Reliance Natural Resources Ltd, senior counsel
Harish Salve said it was RNRL which had in 2007 argued that
marketing freedom cannot be allowed to the Mukesh Ambani-run
firm and asked the government to frame Gas Utilisation Policy.
When the three-judge bench headed by Chief Justice K G
Balakrishnan asked if the Gas Utilisation Policy was notified
like the Industrial Policy, Salve said it was not and
customers/sector identified in the same were passed on to RIL
in form of instructions.
The Gas Utilisation Policy was formulated by an Empowered
Group of Ministers (a sub-committee of the Cabinet) and the
policy was part of the minutes (now part of court records).
On the third day of hearing, Salve told the apex court
that RIL will take longer to recover investments it has made
in the gas field if it is forced to sell fuel at lower rates.
RIL will take 5-5.5 years to recover the USD 5.8 billion
investment made in the KG-D6 gas field if it sells the fuel at
government-approved price of USD 4.205 per mmBtu, Salve said.
However, if it is forced to sell gas at lower rate of USD
2.34 per mmBtu, which RNRL contends that RIL had committed in
the 2005 Ambani family agreement, the cost recovery would be
over seven years.
Salve said Anil Ambani Group firm's Samalkot power plant
in Andhra Pradesh was buying gas from KG-D6 at government-
approved rates of USD 4.2 per mmBtu but was making hue and cry
for other plants.
RIL, he said, was being forced to buy liquefied natural
gas (LNG) from spot market at price of over USD 9 per mmBtu as
the government has not yet allocated any gas from KG-D6 for
its own captive use.
NTPC, which has not yet begin drawing gas from KG-D6
despite being allocated 2.67 million standard cubic meters per
day, is buying imported fuel at USD 9-14 per mmBtu.
Salve said it was not possible for RIL to supply 28
mmscmd gas to RNRL for 17 years as the peak output from the
field will not last for more than seven years.
He said the company cannot accelerate or decelerate the
rate of production as such practices damage the reservoir and
the ultimate recovery.
"If we pump out too slow or too fast there is a problem,"
he said.
When the bench asked if there was a regulatory body for
the upstream oil and gas exploration and production, Salve
said the Directorate General of Hydrocarbons (DGH) was only a
nodal agency without any regulatory powers.
All operators like RIL are bound by the Production
Sharing Contracts (PSC) they have signed with the government.
Bureau Report
First Published: Thursday, October 22, 2009, 15:27