Energy major Reliance Industries is paying more to import liquefied natural gas to power its refinery in western India than if it were allowed to receive gas from its own field, a lawyer for the firm said on Thursday.
Mukesh Ambani-controlled Reliance Industries, India's top conglomerate, and Reliance Natural Resources, led by younger brother Anil Ambani, are fighting a legal battle over terms of a deal to sell natural gas to Reliance Natural at below the price set by the government.
The deal, part of a private family settlement brokered by their mother, split the Reliance empire between the brothers in 2005 following the death of their father.
The disputed gas comes from the vast Krishna Godavari basin, off the east coast, that is operated by Reliance Industries. The field is the country's biggest gas find and is expected to nearly double India's gas output when production peaks to 80 million standard cubic metres a day (mmscmd).
But Reliance Industries is not allowed to buy its own gas by the government, which decides who will buy the gas and at what price.
Reliance Industries, which owns the world's largest oil refining complex, imports LNG at about $9 per million metric British thermal unit (mmBtu) to power its refinery at Jamnagar in Gujarat, company lawyer Harish Salve told the Supreme Court.
Media reports citing company's executive director P.M.S. Prasad have said the price of gas from Reliance's field in the KG basin could cost about $6.25 per mmBtu.
"If we had more marketing freedom, we would get the gas cheaper," Salve told a three-member court bench including Chief Justice K.G. Balakrishnan.
POSTED BY:-
SATISH CHANDRA
PGDM III
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