The Hindu Business Line : RIL will have to pay royalty on KG basin gas: Govt

NEW DELHI: The government on Thursday said Reliance Industries will have to pay royalty on natural gas it is producing from KG basin fields as per the Production Sharing Contract (PSC) signed with it.

Minister of State for Petroleum and Natural Gas, Mr Jitin Prasada, in a written reply to a question in Lok Sabha cited PSC as the governing law for deciding on royalty and government's share in the oil and gas produced from D6 block.

He, however, did not say if the PSC allowed royalty and profit sharing only at the selling price decided by the government. Profit petroleum or profit share is the entitlement of the government, as the owner of the resource, from oil and gas produced fr om the fields.

Government has set $ 4.20 per million British thermal unit as the selling price for D6 gas, but the Bombay High Court last month asked RIL to supply gas to firms run by Anil Ambani Group at $ 2.34 per mmBtu, 44 per cent lower than the price fixed by the government. Prasada did not say if the government will ask RIL to pay royalty and share profit petroleum at $ 4.20 per mmBtu despite the company having to sell half of the peak output of 80 million cubic meters per day at lower rates.

"The court case between RIL and Reliance Natural Resources Ltd is a commercial matter between two companies,'' he said. "As far as government take, including royalty, is concerned, it is government by the PSC signed between the government and the signat ory to the PSC,'' Mr Prasada said. "Royalty is to be paid to the government as per PSC provisions.'' - PTI

Prev: Pulses strengthen on mills buying
Next: Andhra Bank eyes Rs 1.3 lakh crore business

Business Line | NUS Index |

Copyright copy; 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line