An Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, will decide if price of natural gas produced by Reliance Industries from KG-D6 fields can be revised before 2014, Oil Minister S Jaipal Reddy said on Friday.
RIL has demanded a market price of KG-D6 gas instead of $4.205 per million British thermal unit rate fixed for five years ending March 31, 2014. The Oil Ministry had sought an opinion of the Attorney General G E Vahanvati if prices can be revised before the five-year tenure fixed by the government.
"We have received the opinion of AG on the price of RIL gas. It is under consideration," Reddy said.
While Reddy refused to disclose what AG had stated, sources in his ministry said the nation's highest law officer has opined that the contract for KG-D6 does not mandate any fixed period during which the approved price would remain valid.
The Attorney General felt that revision of prices is advisable or not is a matter which the EGoM would have to determine not as a matter of law, but as a matter of policy, they said.
"Naturally, a view has to be taken by EGoM in regard to price of gas . Only EGoM is competent to decide," Reddy said.
AG opinion was sought on specific instructions from the EGoM. And the opinion and Oil Ministry's view would be put before the high-level ministerial panel, he said.
The government had in 2007 approved $4.205 per mmBtu price for KG-D6 gas for first five years of production. RIL began output from KG-D6 on April 1, 2009.
The company, which has seen output halve to less than 32 million standard cubic meters per day in past two years, is seeking market price which will help it deploy deepsea technologies to exploit difficult sections of the reservoir.
India imports liquefied natural gas (LNG) at three times the price fixed for KG-D6 gas and RIL is seeking that price for the eastern offshore fields.
The Oil Ministry is, however, opposed to any revision in rates before timeline fixed by the EGoM.
Sources said Reddy feels that when the then Oil Minister Murli Deora in 2010 rejected a similar demand from RIL, how can he approve any increase in rates.
RIL made a fresh plea for market price in February this year.