Formally joining hands with Reliance Industries Ltd (RIL) in the ongoing battle over declining output at KG-D6 gas block, BP Plc and Niko Resources have issued arbitration notices to the government of India.

British oil giant BP and Canada-based Niko have reportedly issued separate arbitration notices to the government; in which the two companies, like RIL, argued that the production sharing agreement doesn't provide for a penalty in case output lags behind figures projected in field investment plans.

The government has levied a $1.8 billion penalty on RIL and its partners for declining output at KG-D6 gas block. As per the government's estimated figures, gas output has slipped to a 10th of the projected 80 million standard cubic meters per day.

In case, the companies are found responsible for the declining output at the gas block, the government can enchase their bank guarantees.

Like RIL, BP and Niko are faced with a situation where the near-doubling of the gas rate to about $8 per million British thermal units from April 1, 2014, will not accrue to them.

RIL had dragged the petroleum ministry to arbitration in 2012, claiming that the penalty levied by the government for decline in output was in line with the projected output profile.

Meanwhile, RIL has agreed to continue to sell natural gas from its KG-D6 gas fields at the current rate of $4.2 per million metric British thermal units to fertilizer companies until the next government decides to renew the price gas based on the C. Rangarajan committee formula.