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The stock of Reliance Industries could be under pressure this week. The company is in a tangle with the Government over the $1 billion it spent to develop KG-D6 basin. The Oil Ministry says it will not reimburse the amount unless Reliance Industries gas output matches the projected estimates. It was earlier projected to produce 80 mmscmd gas from April this year but the company is currently achieving far less from that. Though Reliance Industries initiated an arbitration process to resolve the issue, the Oil Ministry has so far refused to join the process. Meanwhile, the Ministry served a notice to Reliance last week disallowing about $1 billion as cost recoveries for 2010-11 and 2011-12 in the East Coast gas fields. Reliance, however, continues to maintain that “a contractor is entitled to recover all of its costs under the terms of the production sharing contract and there are no provisions that entitle the Government to disallow recovery of any contract cost.”
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