An allegation against RIL and its partners in D6 block has been that they are not doing enough to increase output from the gas fields because they want the gas price to be increased. On the face of it this may be the reason.

RIL says that the investment involved in increasing output from the D6 fields is not sustainable at the current price of $4.2/mmBtu (landfall point), adding that the current price from the fields is de-linked from the market and was well as below all benchmarks.

The operator of the D6 block and its partners BP and Niko Resources are seeking a price of close to $12.9/mmBtu. At present, D6 gas is being sold at $4.2/mmBtu (landfall point) and is valid till 2014. RIL has argued that artificially suppressed prices make the assets uneconomical.

While RIL and its partners in the block have been seeking review of the gas pricing, the Petroleum Ministry has been maintaining that there will be no review before the current price tenure fixed by an empowered group of ministers expires.

While RIL continues to sort out the pricing issue with the Government, its partner in D6 block, Niko, is selling gas from its Cambay Basin NELP II block at a market price. Niko has been selling gas from Cambay at market price since 2004.

According to Niko, the company had got all the regulatory approvals and followed the PSC procedure for getting the pricing formula approved. The price derived was based on market conditions, and this was the first NELP block to come on production. Gas from this field was sold at about $7/mmBtu (at equivalent terms with D6).

There was no EGoM to decide on the pricing from Niko fields. However, the Petroleum Ministry in 2012 has written to Niko that their price will be provisional till a final decision is taken.

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