Oil ministry withdraws note against RIL gas price hike

Oil ministry withdraws note against RIL gas price hikeThe Petroleum Ministry has withdrawn a note opposing any increase in price of gas produced from Reliance Industries Ltd's KG-D6 oil & gas block before April 2014 as an expert committee headed by Prime Minister's Economic Advisory Council Chairman C Rangarajan is scrutinizing pricing of the fuel.

The note was circulated among the members of the Empowered Group of Ministers (EGoM) on October 10.

Speaking on the condition of anonymity, a top Petroleum Ministry official said, "Yes, the note to EGoM has been withdrawn."

The official added that the note was withdrawn as Rangarajan committee was asked to suggest elements and structure of the guidelines for deciding the formula for the price of gas being produced domestically.

The six-member expert committee was appointed by Prime Minister Manmohan Singh to basically look at the design of future contracts for oil & gas exploration. The committee has also assigned the task of suggesting pricing of natural gas.

RIL wants the government to hike the price of gas produced from its KG-D6 oil & gas block to more than $10 per million British thermal unit. Currently it gets paid $4.2 per million British thermal unit for the same.

Output at KG-D6 block has dropped drastically over the past few years, and the company has been arguing that increasing output needs higher investments. The company says that only market related prices can give an incentive to produce the massive resources that are situated in technologically challenging areas.